Swiss Re predicts non-life premium volume globally will grow at a stronger 2.8% this year and 3.7% in 2022 from 1.5% last year, lifted by what it says is “the strongest rate hardening for two decades in commercial lines”.

The reinsurer says in its latest Sigma study that continued hardening conditions in the commercial space will make up for sluggish growth in the personal lines segment, which is seeing no let-up in competitive pricing pressure as home and motor insurers go all out to gain market share.

“We expect rate hardening to continue this year and next, though price rises should moderate,” Swiss Re said.

Australia is among the markets that chalked up some of the sharpest increases in commercial rates, with financial and professional liability lines up an average 39% last year, Swiss Re says.

The Australian non-life market recorded premium volume of $US48.27 billion ($64.7 billion) last year, making it the 10th largest globally and third among advanced Asia Pacific economies after Japan and South Korea.

“Commercial lines pricing improved globally last year,” the reinsurer said. “We expect the highest premium growth this year and next in commercial [property and casualty] insurance lines of business (including workers’ compensation).

“In these lines, premium volume should grow by about 6% [this year] and around 5% in 2022, supported by significant rate improvements and the economic recovery.”

Swiss Re says strong price increases in commercial lines will remain the “dominant tailwind” for the non-life sector globally.

Personal lines growth and profitability will be softer, as motor undergoes competitive pressure and a return to normal claims after an extraordinarily profitable 2020.

“We expect stable non-life insurance underwriting profitability as rate uplifts in commercial lines offset higher claims in US liability and global motor,” Swiss Re said.

“Rate hardening in commercial lines will continue to define non-life insurance, but personal lines pricing and profitability is softening as competition in motor intensifies.”

Swiss Re says the insurance industry globally, including life, has weathered the COVID-19 pandemic resiliently, with the fall in premium smaller than the 2008-2009 global financial crisis.

It expects above-trend growth of 3.3% this year and 3.9% in 2022, which if achieved, means combined non-life and life premiums written globally will exceed $US7 trillion ($9.4 trillion) for the first time by the end of next year.

Last year insurance premium globally contracted 1.3% but the non-life sector managed to grow 1.5% to $US3.49 trillion ($4.7 trillion), supported by commercial line rate hardening in advanced markets including Australia.

The wide-ranging report says it is still uncertain at this point as to what the final COVID-related property and casualty claims will be.

Latest estimates by various market participants put the approximate loss range at $US30-60 billion ($40.2-80.4 billion).

“[Property and casualty] losses due to COVID-19 to date have been almost entirely related to commercial lines of business,” Swiss Re said.

“The main component has been [business interruption] losses, triggered by communicable disease clauses and event cancellations.”

Click here to download the report.