Rising risk awareness and the strongest rate hardening for 20 years in non-life insurance commercial lines are forecast to push total premium volumes 10% higher than pre-COVID-19 levels this year.
In a new report, reinsurance giant Swiss Re also forecasts that total global premium volumes will surpass $7trn (£5trn) for the first time ever by the end of 2022, aided by a strong economic bounce-back from the pandemic.
The company said that swift vaccine deployment and large-scale fiscal stimulus, including unprecedented direct transfers to households and businesses, are fuelling GDP growth worldwide.
It forecasts global growth to hit a historically high 5.8% this year, with insurance premium growth of 3.3% in 2021, and 3.9% in 2022.
“Whether it is private medical insurance or supply chain interruption for businesses, the pandemic experience has made people much more aware of the need for insurance protection,” said Irina Fan, head insurance market analysis at the Swiss Re Institute.
Despite the positive outlook, the report highlights how the recovery may be uneven worldwide, as much still depends on the ability of vaccines to keep the pandemic under control. Rising inflation is also a key medium-term risk, particularly for non-life insurers.
However, Swiss Re said that the pandemic has cemented paradigm shifts that support the long-term outlook for insurance.
In addition to rising risk awareness, which is proving a strong demand driver for both consumers and companies, a second shift is the acceleration in demand to transact online.
The researchers said that it's imperative that insurers offer digital engagement at all touchpoints as they compete with new, non-traditional players entering insurance markets, with Asia expected to be a source of strong premium growth.
“The economic upswing expected in 2021 and 2022 is on track,” said Jerome Jean Haegeli, group chief economist at Swiss Re. “The main market to watch remains China, where economic and premium growth continue at a strong pace.”
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Author: Chris Seekings