The global life risk protection business is on a path of steady expansion, albeit at a rate below its long-term norm. Swiss Re Institute’s latest sigma report indicates a projected annual premium growth of 2.7% for 2025 and 2026, a dip from the 3.7% annual growth seen between 2014 and 2023. Interestingly, demand for protection products has become less reactive to interest rate fluctuations, leading to a slower repricing dynamic. However, there are still avenues for growth.
In Europe, the demand for disability and long-term care insurance is booming. This is due to a combination of factors such as an improving mortgage market, escalating healthcare and nursing costs, an ageing population, and the strategy of product bundling. In the United States, individual life protection sales are anticipated to remain relatively unchanged, while group life and health sales enjoy more stability, bolstered by a strong employment scenario and wage hikes. On the non-life front, global premiums are set to grow by 4.3% in 2024, the highest in a decade, but are expected to decelerate to a 2.3% annual real growth rate for 2025 and 2026, below the five-year average.
Profitability in the non-life sector remains robust, thanks to investment gains from higher interest rates. Swiss Re Institute forecasts a 10% return on equity for the six largest non-life insurance markets in 2025 and 2026, exceeding the cost of capital. Global real GDP growth is predicted to be 2.8% in 2025 and 2.7% in 2026, lower than the pre-pandemic decade’s average. Geopolitical tensions and trade policy uncertainties continue to widen regional disparities. Swiss Re’s Group chief economist Jérôme Jean Haegeli has pointed out the persisting inflation risks and the reduced likelihood of significant interest rate cuts, especially in the United States, given its strong economic performance. While elevated interest rates can be advantageous for primary insurance markets, the complex geopolitical and economic backdrop demands vigilant risk monitoring.
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