As per a new report from the Swiss Re Institute, total global insurance premiums are set to grow at 2.6% annually in 2025 and 2026, primarily driven by life insurance, which is forecast to expand by 3% per year, more than double the rate of the past ten years.
The Swiss Re Institute’s new Sigma report highlighted several key factors driving this sustained demand, including rising real wages, elevated interest rates in major markets such as the US, ageing populations, and the expansion of the middle class in emerging economies.
“Consumers worldwide are taking advantage of still elevated interest rates. The growth trend is strongest in the US, where individual annuity sales are expected to reach a new record of over USD 400 billion in 2024, well above the USD 234 billion average of the past ten years,” the report explained.
Paul Murray, Swiss Re’s CEO Life & Health Reinsurance, added, “The baby boomers are entering retirement at a time when higher interest rates reinvigorate the insurance savings market.
“It’s a favourable convergence, since retirees are looking for stable and worry-free income, and the insurance industry is stepping up to meet this demand.
“Driven by a still elevated interest rate environment in the US, global life insurance premiums are set to reach USD 4.8 trillion by 2035, up from USD 3.1 trillion in 2024.”
Meanwhile, the demand for fixed-rate annuities in the UK is expected to remain elevated in 2024 before slowing in 2025 and 2026, while in China, anticipated reductions in guaranteed interest rates for savings products have been boosting sales, with this high demand likely to persist in the medium term due to the appeal of longer-term savings products.
The Swiss Re Institute’s report also touched on global economic growth, forecasting real GDP expansion at 2.8% for 2025 and 2.7% for 2026, down from the 3.1% average growth of the pre-pandemic decade.
“However, there are significant regional divergences, and risks are skewed to more adverse scenarios amid heightened geopolitical tensions and trade policy uncertainty,” the report added.
Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, said, “We see higher inflation risks and chances of fewer interest rate cuts than previously assumed, particularly in the US given the election outcome and the continued strong economy.
“Still elevated interest rates could further boost primary insurance markets, especially in life insurance, but a more fragile overall economic environment and volatile geopolitical backdrop raises risks of adverse macro scenarios. Early and proactive scenario monitoring will be critical for the insurance industry.”
