Rebound in sight with China in recovery lead: Swiss Re

Global GDP is forecast to grow by 4.7 percent in 2021 in real terms, below the market expectation of 5.2 percent growth. In this context, the Swiss Re’s latest sigma study finds that, amid the economic shock inflicted by COVID-19, global insurance markets have been less severely impacted than expected in the Swiss Re Institute June 2020 forecast. Total premium volumes in 2020 are estimated to decline by 1.4 percent in real terms, less than the earlier anticipated 2.8 percent drop. Premium growth is forecast to recover swiftly to 3.4 percent and 3.3 percent in 2021 and 2022 respectively, supported by continued rate hardening.

Swiss Re Institute now estimates that global non-life premiums will grow by 1.1 percent this year and recover to an average annual 3.6 percent growth in 2021 and 2022. Volumes are expected to already be back above pre-pandemic levels by the end of next year. Advanced market non-life premiums are forecast to grow by close to three percent in both 2021 and 2022, led by advanced Asia and the US, where a hard market in commercial insurance will boost premiums. China will remain the fastest growing market with premiums up an estimated 10 percent annually over the next two years, largely thanks to a strong health business. The other emerging markets will see aggregate premium growth of nearly four percent annually.

The life market has been harder hit in this year’s economic downturn, with global premiums forecast to contract by 4.5 percent in the environment of rising joblessness and less purchasing power. The rebound will be led by the emerging markets, primarily emerging Asia, with premiums forecast to increase by 6.9 percent in 2021 (and by 8.5 percent in China).

Pricing in non-life insurance strengthened again this year, supporting the market’s overall resilience in terms of growth and profitability.