Swiss Re expects moderate premium growth in global P&C market

Global property and casualty (non-life) insurance premiums grew by 1.9% in 2011 on the heels of solid economic growth in emerging markets and selective rate increases in some advanced markets, according to Swiss Re’s latest sigma study.

The Swiss reinsurer also noted that capital and solvency remained solid despite costly natural catastrophe events and historically low interest rates that lowered insurers’ overall profitability.

In the emerging markets, non-life premium growth was 8.6%, backed by strong economic expansion. The advanced markets reported marginal 0.5% growth, supported by rate increases in some regions and lines of business, according to the report.

“Non-life premium growth in the advanced markets has been supported by gradual rate increases in personal lines of business and in regions affected by large natural catastrophes,” noted Daniel Staib, one of the study’s authors. “Despite the adverse environment in 2011, non-life insurers’ capital position remained sound, putting the industry in a strong position to grow steadily in the future.”

The Swiss Re study predicts moderate premium growth overall in 2012. Higher growth in the emerging markets and hardening prices are expected to support increased premiums. However, the turn of the pricing cycle will likely be gradual and limited to certain markets and lines of business, it said.

“Last year was not a great one for premium growth, but 2012 should be a lot better as rates continue to improve in non-life markets. . . ,” added Kurt Karl, Swiss Re’s chief economist.

The sigma study is the first public assessment of the performance of global insurance markets in 2011, with more than 147 countries represented.