Global insurance premiums are on track to grow steadily, driven largely by life insurance, according to a Swiss Re Institute report published on November 19, 2024. The report forecasts annual growth of 2.6% for total premiums in 2025 and 2026, supported by higher interest rates and strong demand for savings products.
Life Insurance Takes Center Stage
Life insurance premiums are projected to grow by 3% annually over the next two years, more than doubling the average growth rate of the past decade. This surge is attributed to factors like:
- Elevated interest rates: Particularly in the U.S., where retirees are seeking stable income sources.
- Demographic shifts: An aging population and a growing middle class in emerging markets.
- Rising real wages: Boosting consumer purchasing power for insurance products.
Swiss Re’s Paul Murray highlighted the convergence of these trends, forecasting global life insurance premiums to reach $4.8 trillion by 2035, up from $3.1 trillion in 2024.
Savings Products Fueling Demand
Consumers are leveraging elevated interest rates to invest in savings-focused products, with standout trends in:
- United States: Individual annuity sales are expected to hit a record $400 billion in 2024, nearly double the decade average.
- China: Anticipated reductions in guaranteed rates are driving strong sales of long-term savings products.
- Europe: Unit-linked life insurance, which ties returns to market funds, is seeing rising demand, particularly in Italy and France.
Stable Growth in Life Risk Protection
Life risk protection, including disability and long-term care insurance, is growing steadily at 2.7% annually, albeit below its long-term trend of 3.7%. In Europe, demand for these products is driven by structural factors such as healthcare costs, aging populations, and product bundling opportunities. Meanwhile, the U.S. market for individual life protection remains flat, with modest growth in group life and health insurance supported by strong employment and wage gains.
Non-Life Insurance and Regional Divergences
The non-life sector is expected to experience slower premium growth at 2.3% annually in 2025 and 2026, following a strong 4.3% increase in 2024. However, higher interest rates are enhancing profitability, with the industry’s return on equity forecast at 10% in the next two years.
Global Economic Growth and Risks
Swiss Re forecasts global GDP growth at 2.8% in 2025 and 2.7% in 2026, though regional divergences persist:
- U.S.: Growth is expected to moderate to 2.2% in 2025 and 2.1% in 2026, supported by strong consumer fundamentals.
- Europe: Rising trade tensions could hinder growth, with GDP forecast to grow from 0.9% in 2025 to 1.1% in 2026.
- China: Structural economic slowdowns are anticipated, with GDP projected at 4.6% in 2025 and 4.1% in 2026.
Outlook for Insurers
Swiss Re’s Jérôme Jean Haegeli emphasized the importance of proactive scenario monitoring to navigate geopolitical and economic uncertainties. Despite risks, higher interest rates are set to boost primary insurance markets, particularly in life insurance, while insurers benefit from improved investment results and profitability.
The full Swiss Re Institute sigma report, “Growth in the Shadow of (Geo-)Politics,” offers detailed insights into these trends, emphasizing opportunities for insurers amid a shifting global landscape.