The Swiss Re Institute has released a new sigma report highlighting major changes expected in the global economy and insurance sector through 2027. The study, titled "Shifting Sands," identifies fiscal expansion, industrial policy, ageing populations, and artificial intelligence (AI) as key forces shaping economic growth and risk.
According to the report, global gross domestic product (GDP) growth is projected to stabilize at 2.5% in 2026 and 2.6% in 2027. These rates are lower than the pre-pandemic average of 3.1%. Inflation in advanced economies is expected to remain above 2%, driven by increased government spending and persistent supply chain challenges.
Jérôme Jean Haegeli, Group Chief Economist of Swiss Re and Head of Swiss Re Institute, commented: "Industrial policy is rewriting the economic playbook, AI is accelerating, growth looks strong, but the credit cycle will reveal how solid it really is. The re-industrialisation drive and technological transformation are powering activity and supporting the core of underwriting, yet headline economic growth figures mask deeper structural fragilities that will surface once the credit cycle turns. Over the shorter term, we expect the economy to navigate a soft patch, with tariffs still feeding through to prices in the US and exports globally."
The report notes that reliance on industrial policy has grown significantly since 2012 as governments compete for leadership in technology and manufacturing. This shift brings opportunities for insurers in engineering, property, and liability lines but also increases risks related to regional supply chain adjustments.
Ageing populations are changing labor markets and increasing demand for longevity products such as retirement income solutions. Insurers will need to adapt their offerings as protection needs evolve with demographic shifts.
On AI adoption within insurance operations, Swiss Re Institute estimates that by 2025 insurers have allocated between 3–8% of IT budgets toward developing AI capabilities. However, less than 5% of surveyed insurers have reported financial impacts from these investments so far. The authors do not expect significant workforce disruptions in the near term; instead most insurers plan to use AI to augment rather than replace human workers.
Despite these structural changes and potential headwinds from higher inflation or shifting demographics, Swiss Re Institute finds that global insurance markets remain robust. The industry’s solvency ratios are above 200%, with strong liquidity positions supporting resilience.
Global insurance premiums are forecasted to grow by an average of 2.3% annually (in real terms) through 2027. Life insurance premiums specifically are expected to reach USD4.1 trillion by that year—representing about 44% of total market premiums—with annual growth rising from previous years due largely to higher long-term bond yields boosting investment income.
Non-life premium growth will slow slightly before recovering in late-2027 while maintaining solid profitability supported by disciplined underwriting practices.
Regional forecasts show moderate GDP growth for the United States at around 2% annually through 2027; Euro area GDP benefits from fiscal stimulus programs such as Germany’s EUR1 trillion investment initiative; China’s growth moderates amid weaker consumption despite more accommodative policies; emerging Asian economies remain resilient due to flexible monetary frameworks.
For further details or access to macroeconomic data from Swiss Re Institute’s research publications—including executive summaries—interested parties can register at sigma explorer.