Hard market conditions will continue through 2024 for both commercial and personal lines, but begin to ease in 2025, according to the latest sigma report from Swiss Re.
“The insurance industry has reached a new equilibrium after the challenges of recent years. The global economy has surprised on the upside, which should drive more demand for insurance,” said Jerome Jean Haegeli, group chief economist at Swiss Re Institute.
Global gross domestic product (GDP) is forecast at 2.7% for 2024, with the world’s economies “more resilient than expected.”
The reinsurer predicted “material” improvement in underwriting results, with the combined ratio expected to drop below 100%, lifted by high premiums and solid investment income even as exposures rise. An “easing” of claims as inflation lessens should help as well, Swiss Re reported. The firm said it expects a 10% return on equity for P&C insurers in 2024, up from 6% in 2023.
The reinsurer predicted global premium volume to “build upon” the 3.9% growth from 2023 and hit $4.6 trillion in 2024 and$4.8 trillion in 2025.
Rate increases in personal lines outpaced commercial lines in 2024, Swiss Re noted.
“Commercial insurance accounts for almost half of the total property and casualty market,” said Kera McDonald, chief underwriting officer for Swiss Re Corporate Solutions. “We expect commercial P&C carriers to maintain profitability in 2024, as rate trends have enabled lines like property to stay sustainably priced. The industry has seen single-digit rate increases for property businesses written this year. On the casualty side, we observe a trend of general market softening across most long-tail lines.”
Some pressures remain for both the insurance industry and buyers. Swiss Re reported. Wage growth in some regions has not kept pace with insurance premium rate increases.
“This could make coverage less affordable, but so far, there has been little indication that insurance uptake rates have been compromised,” said the reinsurer.
For the industry, “potential new inflation shocks” exist.
“For example, geopolitical conflicts that disrupt global supply chains can rekindle claims inflation. In addition, social inflation has been a key concern for liability insurers in the U.S. since 2015. Lately, there have been signs of social inflation in Australia,” Swiss Re warned.
Brad Henderson is the Executive Vice President at Network Insurance Services and leads their Community Association Division. He is a second-generation insurance professional. He began his insurance journey at 18 years old, obtaining his insurance licenses in 2008 just a month after becoming eligible under Colorado state law. His passion for problem-solving and building relationships led him to his niche focus in Community Association Insurance, where he enjoys a consultative approach to partnering with property managers and board members in navigating the complexities of commercial insurance.
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