Life premiums in real terms are expected to decline 19% in the Oceania region, dragged down by a sharp fall in investment-linked business in Australia, Swiss Re says in its latest Sigma study.

“Ultra-low interest rates will continue to drag on the demand for savings-liked products,” the study says. “Early indicators suggest that real premiums in Oceania will contract sharply this year.”

Globally, Swiss Re sees life premiums declining 4.5% in real terms this year before rebounding 3% next year.

The 4.5% projection is an improvement from the reinsurance giant’s previous prediction made in June, when it called a 6% contraction. It says the revision is based on a stronger than expected performance in the US market.

For advanced markets in North America, Swiss Re has narrowed its premium contraction outlook for this year to 2.6% from 7.7% previously and there is a likelihood of a modest recovery of 0.6% next year.

“Disruptions to distribution due to lockdowns were lower than initially anticipated and rising risk awareness has shored up demand for protection products,” Swiss Re says.

In the advanced markets of Asia, which includes Australia, premium is expected to decline 3.3% in real terms before recovering next year with a likely rise of 2.3%.

“The life sector has been harder hit but growth will rebound next year. Low interest rates will pressure profitability,” the Sigma study says.

Swiss Re remains uncertain as to the ultimate impact of COVID-19 on life claims globally.

Click here to access the Sigma study: