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FX.co ★ Swiss Re Institute Sees Growth In Global Insurance Premiums In FY25, FY26

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typeContent_19130:::2024-11-19T10:57:00

Swiss Re Institute Sees Growth In Global Insurance Premiums In FY25, FY26

Swiss Re Institute, the research division of Swiss Re Ltd. (SSREY.PK), a leading reinsurance company, has projected a 2.6% annual growth in global insurance premiums for the years 2025 and 2026. This growth is mainly attributed to the life insurance sector, driven by sustained higher interest rates, particularly in the United States.

The institute's latest sigma report, titled "Growth in the Shadow of (Geo-)politics," forecasts that global life insurance premiums will increase by 3% annually over the next two years, which is more than twice the growth rate observed over the past decade.

Due to the persistently elevated interest rates in the U.S., global life insurance premiums are expected to rise significantly, reaching $4.8 trillion by 2035, up from $3.1 trillion in 2024, as noted by Swiss Re Institute.

The institute also anticipates robust global economic growth, predicting rates of 2.8% for 2025 and 2.7% for 2026, despite mounting geopolitical and financial risks.

The demand for insurance remains strong, bolstered by factors such as rising real wages, sustained higher interest rates in pivotal markets like the U.S., aging populations, and the expansion of the middle class in emerging economies.

Given the enduring high interest rates, individual annuity sales in the U.S. are projected to surpass $400 billion in 2024, markedly exceeding the average of $234 billion recorded over the past decade.

Swiss Re Institute predicts a 2.7% annual growth in premiums for the life risk protection sector in 2025 and 2026, which falls short of the long-term growth trend of 3.7% per year observed from 2014 to 2023.

According to the sigma report, demand for fixed-rate annuities in the U.K. is expected to remain strong in 2024 before tapering in 2025 and 2026. Meanwhile, in China, a decrease in guaranteed interest rates for savings products is driving a surge in sales.

In Europe, there's a noticeable increase in demand for disability and long-term care insurance. In the U.S., sales of individual life protection products are expected to plateau, although group life and health sales display slightly more resilience due to solid employment rates and wage increases.

Paul Murray, CEO of Life & Health Reinsurance at Swiss Re, remarked, "The entry of the baby boomer generation into retirement coincides with a period of heightened interest rates, revitalizing the insurance savings market. This favorable conjunction is timely as retirees seek secure and stable income sources, and the insurance industry is adeptly positioned to fulfill this need."

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