Gradual global economic growth will raise premiums over the next couple of years, as insurers’ investment returns remain subdued, according to Swiss Re.

Investment funds will continue to roll over at low levels, while global interest rates will increase very gradually.

“The rollover is going to mean investment yields will decline for another two years at least, maybe three, before they start to pick up with higher yields and the rollover of large fixed-income blocks of assets,” Chief Economist Kurt Karl told insuranceNEWS.com.au.

Dr Karl recently told a conference in Canada that major central banks will probably start raising interest rates in 2015, but insurer investment returns will recover later.

In Europe, combined ratios have moved down in response to lower investment returns.

“That is what you would hope for and expect,” Dr Karl said. “If you don’t have the investment yield, you have to improve your underwriting profits.”

US property and casualty prices for primary insurance have been firming, except in workers’ compensation, while reinsurance remains soft because of the capacity available, he says.

In Europe, motor business prices have risen.

Dr Karl says generally the market has become less volatile for casualty lines and catastrophe insurance, where the availability of alternative capital has been a significant factor.