Swiss Re is expecting a strong global economic recovery from COVID-19 to result in historically high global gross domestic product (GDP) growth of 5.8% in 2021.
Global insurance premiums are set to follow this strong growth, increasing by an expected 3.3% in 2021 to a total of $6.9 trillion. The report forecasts 3.9% insurance premium growth for 2022.
In 2021, key market insurance 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 its latest Sigma report Swiss Re also points out how factors such as inflation and digitalisation are influencing insurance industry development.
A key opportunity for insurers is the positive development in consumer awareness, which has been cemented by the COVID-19 pandemic.
The report 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.
”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,” Jerome Haegeli, Group Chief Economist at Swiss Re Institute.
“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.”
”The economic upswing expected in 2021 and 2022 is on track to materialise, and this is a key factor for insurance premium growth across the globe. The main market to watch is China, where both economic and premium growth continue at a strong pace.
“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.”
John Chen, President of Swiss Re China, added, ”The Chinese economic bounce-back will drive the recovery of the world economy and boost the development of the insurance industry in China, which will further improve the societal resilience and enable the high-quality development of both the insurance industry and the Chinese economy.
“The 14th Five-Year Plan and other ambitious goals have outlined great growth opportunities and space for innovation.”