Global nonlife premium growth expected in 2023 and 2024
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Rate hardening, easing inflation and improving economic conditions will bring a rebound in global nonlife premium growth in 2023 and 2024, according to a Swiss Re Institute report released Thursday.
Nonlife real premium growth will recover to 1.8% in 2023 and 2.8% in 2024, after weak 0.9% growth in real terms this year, Swiss Re forecasts.
Commercial lines are expected to benefit most from rate hardening, with 3.3% growth in global commercial premiums forecast in 2022 and a 3.7% increase in 2023.
Significant claims inflation in commercial lines will fuel fresh momentum in rate hardening for the next 12 to 18 months, Swiss Re said.
Increasing construction costs in many countries and high and rising natural catastrophe losses following Hurricane Ian will put upward pressure on property lines, according to Swiss Re.
In the U.S., commercial property prices accelerated to 8% year-over-year in the third quarter, up from 6% in the second quarter.
In casualty, Swiss Re expects rising wages and health care costs in the post-pandemic world and ongoing social inflation to push up premium rates in 2023.
Compared with the trough in 2017, property rates are 60% higher, while casualty rates are up by close to 20%, Swiss Re said.
Looking ahead, Swiss Re expects the insurance industry to return to total premium growth of 2.1% annually on average in real terms in 2023 and 2024.
Higher interest rates should be a “silver lining” for insurers as inflation pressure eases in 2023 and 2024 and are expected to improve investment results over the medium term and profitability, Swiss Re said.
Swiss Re forecasts global real GDP growth of only 1.7% in 2023 as inflationary recessions approach major economies.
