Global reinsurer Swiss Re is expecting non-life premiums to grow by at least 3% annually over the next two years and life premiums to grow by 4%, with the majority being driven by emerging markets.
The reinsurance giant has said that an improved economic outlook is expected to fuel demand for non-life insurance solutions, anticipating global non-life premiums to expand by at least 3% in both 2018 and 2019. The 3% growth could be far higher depending on the magnitude of expected rate increases following the large level of catastrophe losses experienced in the third-quarter of 2017.
The reinsurer expects emerging markets to be the main driver of premium growth, with premiums forecast to rise by 6% to 7%, in real terms annually, over the next two years.
Throughout 2017 the profitability of the global non-life insurance industry has declined, driven by soft underwriting conditions, poor investment returns and high catastrophe losses. However, Swiss Re expects profitability in the sector to improve over the next two years, as underwriting conditions improve and investment returns strengthen.
For non-life reinsurance, Swiss Re states that premiums are estimated to have grown by 3% in 2017, in real terms, and over the next two years the reinsurer expects premium growth in emerging markets to remain steady on the back of increased insurance penetration.
While in advanced markets, non-life reinsurance premium growth is expected to reflect a modest hardening of rates, and strong primary insurance market growth.
In the life sector, Swiss Re estimates that global premiums increased by roughly 3% in 2017, and are expected to increase by almost 4% annually over 2018 and 2019. Again, emerging markets is expected to drive the majority of the growth, although profitability remains challenging in the life industry owing to low interest rates.
Global life reinsurance cessions, according to Swiss Re, are anticipated to grow by more than 1% in 2017 and also over the next two years. Hindering expansion in this segment is weakness in North America and Europe, although Swiss Re expects this to be somewhat offset by strength in both advanced and emerging Asia.
“The reinsurance sector is likely to benefit from the adoption of risk-based regulatory regimes in many emerging markets. But in certain regions, such as sub-Saharan Africa, some governments have made protectionist moves in favour of local reinsurers or enacted additional collateral requirements for foreign reinsurers, which could dampen both primary insurance and reinsurance premium growth,” said Swiss Re.