Global insurance premiums are projected to grow at an annual rate of 2.6% in 2025 and 2026, supported by elevated interest rates, especially in the United States. According to Swiss Re Institute's sigma report titled "Growth in the shadow of (geo-)politics," life insurance is expected to drive this growth with a forecasted global increase of 3% per year, which is more than double the growth rate of the past decade.
Paul Murray, CEO of Life & Health Reinsurance at Swiss Re, highlights the role of demographics and interest rates: "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."
In the US, individual annuity sales are anticipated to surpass USD400 billion in 2024, marking a significant rise from the average of USD234 billion over the last ten years. In China, despite anticipated reductions in guaranteed interest rates for savings products, strong demand persists due to longer-term savings products' appeal.
The sigma report indicates that consumers in advanced markets may shift from fixed annuities towards index-linked policies as central banks lower interest rates. This trend is already visible in Europe and is expected to spread to other regions like the US by 2025.
While life risk protection business shows steady growth at 2.7% annually for 2025 and 2026, it remains below its long-term trend of 3.7%. European markets show robust demand for disability and long-term care insurance driven by factors such as rising healthcare costs and aging populations.
Non-life insurance premiums are expected to grow at a slower pace than previous years. However, profitability remains strong due to improved investment results from sustained high-interest rates. Swiss Re Institute forecasts a return on equity of 10% in major non-life markets for both 2025 and 2026.
Swiss Re Institute projects solid global economic growth with real GDP increases of 2.8% for 2025 and 2.7% for 2026 but notes significant regional divergences amid geopolitical tensions. Jérôme Jean Haegeli, Group Chief Economist at Swiss Re, states: "We see higher inflation risks and chances of less interest rate cuts than previously assumed... Still elevated interest rates could further boost primary insurance markets."
Economic outlooks differ across regions with US growth expected to moderate yet remain strong compared to Europe which faces challenges from global trade tensions. China's economy is predicted to slow down structurally despite recent monetary easing efforts.
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