Insurers could face a return to an uncertain economy next year despite predictions showing continued growth in all areas.

Swiss Re’s most senior economists last week released their global outlook for the industry, saying although there is a positive move towards growth this is coupled with financial turmoil threatening to “derail the global economic recovery”.

The reinsurer’s US Chief Economist Kurt Karl – who was interviewed by insuranceNEWS.com.au on December 6 – says in the outlook that the global economy is continuing to grow moderately, but there has been a distinct change in direction between developed and emerging markets.

“Emerging markets are booming, while developed economies are growing at a more moderate pace – a situation that is set to continue in 2011/12,” he said.

Despite predicting a slight growth acceleration in developed economises, Swiss Re expects to remain closer to its long-running prediction of average premium rises of up to 3% in the US and 1.5% in Japan.

On the downside, the economists predict a potential widening of the Euro zone debt crisis which could lead to increased pressure on a recovering economy.

Mr Karl says although the recovery phase is nearly 18 months old, investor trust in its continuation is still weak.

Low interest rates in developed economies will also continue to confront insurers as a key challenge next year.

Swiss Re’s Chief Economist Thomas Hess says this is leading to insurers and pension funds paying for the cheap financing of households and corporations.

He says the risk of over-regulation remains high, with regulators’ “overly conservative view of the insurance sector” unjustified.

“While the insurance industry does not object to being part of systematic risk monitoring efforts as a means of averting future crises, it opposes the systematic risk supervision of insurance groups,” the report says.

“Efforts should be dedicated instead to enhancing group supervision.”