Swiss Re predicts record-high global insurance premiums by end of 2022

As the world economy steadily recovers from the COVID-19 pandemic, Swiss Re forecasts that global insurance premiums will reach a never-before-seen U.S.$7 trillion by the end of 2022.

According to the global reinsurer’s recent World Insurance Sigma report, the pandemic has had a significant impact on the insurance industry. Risk awareness is up and insurance demand is estimated to grow 3.3% by year’s end and 3.9% in 2022.

The swift deployment of vaccines and large-scale fiscal stimulus are fuelling a stronger economic bounce-back than projected last year, forecasting a historically high global real GDP growth of 5.8% in 2021.

“Rising risk awareness and the strongest rate hardening for 20 years in non-life insurance commercial lines will push total premium volumes 10% higher than pre-COVID-19-crisis levels this year,” the report notes. “By the end of 2022, we forecast that total global premium volumes will surpass U.S.$7 trillion for the first time ever.”

Recovery may not be even across the globe as vaccine availability and rollouts to control COVID-19 vary. Rising inflation, particularly for P&C, remains a medium-term risk, the report notes.

Post-pandemic paradigm shifts

However, the scales are tipped towards a positive insurance market outlook, with the pandemic having “cemented paradigm shifts” in insurance and risk awareness that support long-term growth.

In addition to rising risk awareness, which is proving a strong demand driver for both consumers and companies, the pandemic highlighted an accelerated demand to transact online. As such, insurers will need to offer digital engagement “at all touchpoints” to compete with new, non-traditional competitors entering insurance, the report says.

COVID-19 also heightened consumer demand for preparedness-related products.

“Whether it is private medical insurance or supply chain interruption for businesses, the pandemic experience has made people much more aware of the need for insurance protection,” says Irina Fan, head of insurance market analysis at the Swiss Re Institute and an author of the report.

A continued focus on digitization, climate change and consumer risk awareness will further drive the path to sustainable growth for the insurance industry as the world recovers from the pandemic, Swiss Re concludes.

Feature image via iStock.com/sesame