Tariffs introduced by the US government are expected to dent global insurance premium growth, with both life and non-life forecast to slow sharply in 2025, according to Swiss Re Institute’s latest sigma report.

Global premium growth is forecast to drop to 2% in 2025, down from 5.2% in 2024, amid weakening economic conditions, policy instability and intensifying competition. Non-life premium growth is projected to fall to 2.6% this year from 4.7%.

US motor physical damage is expected to be the most affected insurance sector, with tariffs raising the cost of imported auto parts and increasing claims severity. Motor repair and replacement costs are forecast to rise by 3.8% in 2025.

Jérôme Haegeli, Swiss Re's group chief economist, said: "While insurers' profitability outlook is still benefiting from rising investment income, we expect tariffs to slow global GDP growth and consequently weigh on insurance demand. In the long term, US tariff policy is another move towards more market fragmentation, which would reduce the affordability and availability of insurance and so diminish global risk resilience."

Swiss Re added that longer-term market fragmentation could erode the insurability of peak risks, as cross-border restrictions raise capital costs and reduce efficiency. However, credit and surety lines, as well as marine insurance outside the US, may benefit from increased demand due to economic uncertainty and supply chain realignments.

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