Swiss Re looks to higher pricing in 2018
Swiss Re has predicted an increase in prices in non-life insurance and reinsurance.
In its Global insurance review 2017, and outlook 2018/19 report, the reinsurer has stated that the multiple natural catastrophe events in 2017 have drained resources, along with low prices that have fallen substantially over the years.
“The global economy is in a cyclical upswing, and the forecast is for moderate growth in 2018 and 2019. This should further support growth in the insurance markets, with global non-life premiums forecast to rise by at least three percent and life premiums by about four percent in real terms annually in 2018 and 2019. The emerging markets, particularly in Asia, will continue to be the main driver of premium volume gains,” the report states.
The large losses are expected to lead to rate hardening in both non-life insurance and reinsurance. “Price rises in loss-affected segments are already happening and could be substantial” stated Kurt Karl, Swiss Re’s group chief economist in a press release. “The ultimate volume of losses is not yet known, but appears to be large enough to cause price increases beyond the affected sectors. This is also happening because prices have fallen so low over the past few years.”
The overall emerging market non-life premium growth reflects the stabilising economic conditions in most regions. In addition, non-life business will continue to benefit from urbanisation, and rising home and car ownership. Concerns about environmental protection, food safety and underinsurance in property are also expected to start to filter through to sturdier demand for associated liability and property covers.
Global life premiums are estimated to have grown by about three percent in 2017 (up from two percent in 2016), supported by robust performance of savings products in emerging markets, particularly in Asia. Premiums are forecast to increase by close to four percent annually over the next two years.
The major driver will remain the emerging markets, where premiums are expected to grow by around 10 percent in 2018 and 2019, with a focus on China, the report stated.
