The impressive dynamic expected for 2021 and 2022 is driven by the forecasted strong global economic recovery from COVID-19 that will lead to historically high global real gross domestic product (GDP) growth of 5.8% in 2021.
"Rising risk awareness and the strongest rate hardening for 20 years in non-life insurance commercial lines will push total premium volumes 10% higher than pre COVID-19-crisis levels this year. By the end of 2022, we forecast that total global premium volumes will surpass USD 7 trillion for the first time ever," reads the report. As for the key markets' evolution, premium growth is forecast at 6.3% for China, 1.7% for the US, 2.8% in Western Europe and 5.6% for emerging markets in 2021.
"We expect the insurance industry to earn a record USD 7 trillion in premium by end of next year. The best preparation for the next economic shock is having economic buffers in place. However, fiscal and monetary buffers are being depleted, which means the private insurance sector is increasingly important. Narrowing protection gaps needs to become an economic policy goal," commented Jerome HAEGELI, Group Chief Economist at Swiss Re Institute.
Besides the general economic growth, rising risk awareness and the strongest rate hardening for 20 years in non-life insurance commercial lines are the main growth drivers and "will push total premium volumes 10% higher than pre COVID-19-crisis levels this year. By the end of 2022, we forecast that total global premium volumes will surpass USD 7 trillion for the first time ever."
The report examines how factors such as inflation and digitalisation are influencing insurance industry development. Also, it highlights how global health and protection-type insurance premiums grew by 1.9% and 1.7%, respectively in 2020, as the pandemic increased awareness of the value of health and protection-type products. "Consumer awareness is clearly an important growth driver, and this has been driven by the pandemic. Whether it is private medical insurance or supply chain interruption for businesses, people have become much more aware of what insurance is, and how it can help them to emerge resilient from such a crisis," HAEGELI stressed out.
"However," the report warns, "uncertainty around the emergence of more transmissible COVID-19 variants and the ability of vaccines to keep the pandemic under control suggests that the recovery may be more uneven and protracted than our base-case forecasts. Insurance demand will benefit from the growth momentum, but a firmer inflation environment is a concern. Policymaking will soon turn to fiscal consolidation, but we believe optimal policy must take a long-term view in areas such as digitization, climate change and income inequality."
The main threats and growth factors for the global insurance market's evolution in 2021 and 2022 are summarized by the sigma report as follows:
Swiss Re publishes its annual world insurance premium sigma since 1968, thus providing for a premier source of insurance premium data. The report includes premium volumes by country, penetration rates, insurance density and key macroeconomic indicators. The report also contains in-depth analysis of the economic and societal context shaping the insurance industry.
The full report is available here.