The global insurance market is forecast for strong growth in 2022 and 2023 with total premium volumes expected to rise above US$7 trillion in nominal terms for the first time ever by the end of this year, according to the latest World Insurance Sigma report published by Swiss Re Institute.

However, the report also warns that a combination of a sharply slowing global economy and a multi-decade-high inflation will weigh on total premium growth with an expected below-trend 1.2% annual average growth in real terms over the two years. Rising claims’ costs are seen extending rate hardening, the latter improving underwriting profitability and underpinning premium growth in 2023.

Jerome Haegeli, Swiss Re's group chief economist, said: “Even in the face of a challenging economic environment, insurance remains a vibrant, resilient and growing industry, and reaching the US$7 trillion mark for global premiums is a major milestone.

“However, these are not easy times, and the insurance industry will need to keep a close eye on inflation. As the world gets more expensive, so do the costs of accidents and natural catastrophes, and this makes claims more expensive. However, there is a silver lining, as central banks take action to combat inflation, higher interest rates will support insurers' profitability in the medium term.”

The market forecast is supported by solid employment and income growth, hardening P/C premium rates and heightened risk awareness for mortality and health risks. At this level, volumes will be 17% higher than at the onset of the Covid-19 crisis which, the reports says, reflects the resilience of insurance markets over the course of the pandemic.

The US remains the largest insurance market in the world, with total premiums of US$2.7 trillion in 2021, while China is the second largest market with over US$0.7 trillion in premium, accounting for 10.1% of the total global insurance volume. In Europe, both the UK and France showed strong growth in nominal terms in 2021, with 16.7% and 24.0% increases in total premium volumes, respectively. They remain the 4th and 5th largest markets globally.

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