Growth in global non-life premiums is forecast to fall slightly from 2.4% in 2016 in real terms to 2.2% in 2017, before rising to 3% in 2018, while the global life premiums are expected to grow by 4.8% in 2017 and 4.2% in 2018, Swiss Re’s publication Global insurance review and outlook for 2017/18 shows.
The report said the global economy is expected to grow moderately over the next two years, supporting continued growth in insurance premium volumes. The emerging markets, in particular emerging Asia, will be the main driver of premium growth in both the non-life and life sectors.
Of the major economies, the US is expected to grow by slightly more than 2% in inflation-adjusted (real) terms annually over the next two years. The election of Donald Trump as president-elect was not explicitly incorporated into the US forecast, but this development is unlikely to have a major impact on insurance markets over the next two years.
The Euro area and the UK are forecast to grow by about 1.0% and 1.5%, respectively, while Japan should grow by less than 1.0%. China is expected to grow by around 6.5%.
Monetary policy will remain accommodative for the next two years, even as the US is expected to gradually raise rates. Other central banks are expected to keep their policy rates and quantitative easing policies intact. With the Fed raising rates, US 10-year government bond yields will likely rise, pulling yields in Europe slightly higher.
“The insurance industry faces headwinds, with moderate economic growth, and still ample capacity in the markets creating a challenging pricing environment,” said Mr Kurt Karl, Swiss Re’s Chief Economist. “Nevertheless, premium volumes continue to grow, in both the advanced and emerging markets along with economic activity and an increase in the insurance penetration rate, particularly in emerging markets.”