China Economic Weekly - Economic Net News (Reporter Xie Wei) On July 13, the latest Sigma report released by Swiss Re Research Institute predicts the world insurance industry. The global insurance market will grow strongly in 2022 and 2023. Total nominal premiums will exceed $7 trillion for the first time by the end of this year.
But a sharp slowdown in the global economy coupled with the highest inflation in decades will weigh on premium growth, with real annual growth expected to average 1.2% below trend over the next two years. Rising claims costs will lead to further rate increases, helping to improve underwriting profitability and drive premium growth in 2023. In addition, over time, higher investment yields brought about by rising interest rates will benefit the industry's profit prospects.
Dr. Jerome Haegeli, Chief Economist of Swiss Re Group, said: “Even if the global economy faces severe challenges, the insurance industry remains a dynamic, resilient and growing industry – global premiums have reached US$7 trillion. An important milestone. However, there are challenges in any period, and the insurance industry needs to pay close attention to inflation in the near future. As the cost of production and living in the world becomes more expensive, losses from various accidents and natural disasters are also increasing. It will push up claims costs. At the same time, as central banks in various countries take action to fight inflation, higher interest rates will help improve the medium-term profit prospects of insurance companies, which is also a glimmer of hope in the global economic situation."
report. It is predicted that the nominal value of global total premiums will grow strongly by 6.1% in 2022 and will exceed US$7 trillion for the first time. This is driven by steady employment and income growth, rising property and casualty insurance rates, and increased awareness of mortality and health risks. In this scenario, global premiums would be 17% higher than at the onset of the COVID-19 crisis in 2020, reflecting the resilience of insurance markets during the global pandemic. The
report believes that the current high inflation environment will drag down the actual growth rate of premiums and push up the claims costs of non-life insurance. Earnings pressures from economic inflation are rising fastest in industries such as real estate and automobiles, as supply shortages in these industries cause prices to rise more than overall inflation. High wages and health care cost inflation have pushed up the claims costs of accident insurance and medical insurance . The
report also noted that rising claims costs will prolong the cycle of rate strengthening, thereby restoring underwriting profitability and driving premium growth in 2023. Therefore, the insurance industry will demonstrate resilience amid the slowdown in economic growth and resume real growth in 2023
The report predicts that non-life insurance premiums will grow by 7.1% in nominal terms in 2022, and global non-life insurance premiums will reach 4.1 trillion by the end of this year Dollar. Taking into account inflation , this would be equivalent to a real growth of 0.8%. Non-life insurance premiums are expected to increase by 2.2% in real terms in 2023, mainly due to the continued increase in rates. Commercial premiums are expected to grow faster than personal insurance premiums. The
report predicts that the nominal value of life insurance premiums will increase by 4.8% in 2022, and global life insurance premiums will reach US$3.1 trillion by the end of this year. However, after adjusting for inflation, the actual growth rate of life insurance premiums will shrink by 0.2% in 2022, and will return to positive growth in 2023. This is mainly due to the increase in risk awareness after the epidemic and the rising consumer demand for protection products in the post-epidemic era. In addition, although claims related to the COVID-19 epidemic will still affect full-year performance in 2022, the scale of claims is expected to decrease, leading to improvement in life insurance profitability. The
report ranking the world's insurance markets found that the United States remains the world's largest insurance market, with premiums totaling $2.7 trillion in 2021. Total U.S. premiums increased by 8.1% in nominal terms in 2021. China is the second largest insurance market in the world, with total premiums exceeding US$0.7 trillion, accounting for 10.1% of global premiums. The
report stated that since the first half of this year, affected by domestic and foreign factors such as the international situation and the new crown pneumonia epidemic, China has actively stabilized employment and promoted growth while adhering to the principle of epidemic prevention and control, so as to maintain economic operations within a reasonable range. As an important engine for promoting global economic recovery and development, the steady growth of China's economy is expected to promote the high-quality development of the insurance industry and further enhance social resilience.The
report believes that the inflationary pressure faced by the Chinese economy is generally controllable and the economic growth environment is generally good, which will help promote the insurance market to maintain stable growth in 2022/23. "Common prosperity" and " carbon neutral " are important goals for China's long-term economic development, and enhancing economic and social resilience is an important condition for promoting China's sustainable growth. Looking to the future, insurance will play a broader and more important role in promoting low-carbon economic transformation, improving social equality, and enhancing social resilience.
