Home / International / Insurance will outperform with V-shaped recovery: Swiss Re
13 July 2020
Global insurance premium volumes will recover to pre COVID-19 crisis levels next year, underpinned by a strong rebound in China and other emerging economies, Swiss Re says.
Before bouncing back in 2021, the magnitude of premium losses will be similar to that seen during the global financial crisis in 2008-09, even though this year's economic contraction of around 4% will be much more severe, it says.
"The insurance industry is showing resilience in face of the COVID-19-led economic downturn," Group Chief Economist Jerome Jean Haegeli said.
“Unlike for the global economy, we expect a strong V-shaped recovery in insurance premiums, a remarkable showing considering that the world is currently in the throes of the deepest recession ever,” he said.
Swiss Re estimates that total premium volumes in advanced markets will shrink by 4% this year and return to positive growth of more than 2% in 2021.
In emerging markets, premium growth will remain in positive territory in both years, up 1% this year and a robust 7% in 2021.
The reinsurer says this year's recession will be the deepest since the Great Depression of the 1930s, but it will also be short-lived.
The immediate impact is a steep fall in demand for insurance. After growing by 2.2% in 2019, global life premiums are forecast to contract by 6% this year, with savings products more affected, while mortality-related covers will be more stable.
The general insurance industry will fare better, with global premiums forecast to be down 0.1% after growing by 3.5% in 2019, helped by rate hardening which has supported premium growth.
This is likely to continue amid potentially high losses and contracting supply of insurance cover, particularly in commercial lines.
Along with the expected comeback in insurance demand, this will support earnings over the longer term, Swiss Re says.
Premiums in trade and travel-related insurance business such as marine, aviation and credit will be hit the hardest, while property and medical business will be more stable.
The report says the COVID-19 crisis will raise risk awareness and demand for risk protection across many lines of business.
The pandemic will also likely accelerate a restructuring of global supply chains to mitigate future business disruption risks, giving rise to new premium pools in property, engineering and surety insurance.