Global economic growth is expected to slow in 2025, with US tariffs contributing to reduced trade and heightened uncertainty, according to the latest World Insurance sigma report from Swiss Re Institute. The report forecasts global GDP growth (inflation adjusted) will decline to 2.3% in 2025 and further moderate to 2.4% in 2026, down from 2.8% in 2024. In line with this trend, global insurance premium growth is projected to decelerate sharply from last year’s pace.
Jérôme Haegeli, Swiss Re's Group Chief Economist, said: "While insurers' profitability outlook is still benefiting from rising investment income, we expect tariffs to slow global GDP growth, and consequently weigh on insurance demand. In the long term, US tariff policy is another move towards more market fragmentation, which would reduce the affordability and availability of insurance, and so diminish global risk resilience."
The report describes US tariff policy as a stagflationary shock for the United States. Policy changes have created instability that has eroded confidence in the US government as a "safe haven" for capital flows. As a result, Swiss Re Institute has lowered its economic growth expectations for most major economies next year.
US GDP growth is forecast at 1.5% in 2025—down from 2.8% in 2024—reflecting less efficient supply chains and increased protection for domestic industries leading to higher inflation rates on average compared with previous years. Haegeli added: "US consumers will be hit hardest by US' tariff policy and cut their spending as a consequence of higher prices. This in turn will weigh on US growth which mostly depends on household consumption."
A rebound is anticipated later in 2026 as the economy adjusts to elevated tariffs; Swiss Re expects firmer US GDP growth of 1.8%, helped by more stable labor market conditions.
In Europe, ongoing policy uncertainty is predicted to hold back economic activity this year with no change expected from last year's modest rate of expansion (0.8%). However, if Germany adopts a more expansionary fiscal stance and the European Central Bank continues cutting interest rates as projected next year, euro area GDP could grow by up to 1.3%. China’s economic output is also forecasted to slow slightly due to tariffs and continued uncertainty disrupting activity.
Swiss Re Institute notes that greater fragmentation of markets poses risks for insurers globally—including prolonged inflation that raises claims costs and restrictions on cross-border capital flows which may lead insurers toward less efficient capital allocation and higher operating costs.
Premium growth across both life and non-life sectors is set to weaken significantly after robust performance last year: total premium volume worldwide grew by over seven percent between 2023 ($7.28 trillion) and 2024 ($7.80 trillion), but annualized premium growth will likely fall back near two percent through at least next year.
Non-life insurance faces especially tough conditions due largely to intensifying competition within personal lines products such as auto coverage; overall non-life premium increases are projected at just over two-and-a-half percent this year compared with nearly five percent last year. Life insurance premiums are expected to see even slower gains following strong expansion during periods of high interest rates.
The impact of tariffs varies across regions but is most pronounced within the United States—particularly for motor physical damage insurance where repair costs are affected by higher import prices for auto parts as well as vehicles themselves used for replacement purposes; however these cost increases remain below levels seen immediately after COVID-19 disruptions.
Swiss Re suggests some opportunities may emerge despite these challenges: increased awareness of risk can drive demand for certain products such as credit or surety insurance while supply chain realignment outside the US could benefit marine insurers serving other trading blocs.
Among the world’s largest markets by nominal premium volumes in USD terms during calendar year 2024 were the United States ($3.50 trillion), China ($792 billion), United Kingdom ($485 billion), Japan ($339 billion), France ($292 billion), Germany ($266 billion), Canada ($181 billion), Italy ($180 billion), South Korea ($176 billion) and India ($141 billion).
Haegeli concluded that although insurers’ profitability outlook remains positive due mainly to investment income gains amid weaker business expansion prospects globally, ongoing market fragmentation driven by trade barriers poses significant risks not only for industry participants but also broader financial resilience worldwide.