Swiss Re is forecasting that climate change and cyber risk will drive and maintain premium growth in the insurance market.
Non-life insurance premiums are expected to be 10 percent higher than the pre-COVID-19 level by the end of 2021 at $6.9 trillion and surpass $7 trillion in 2022 for the first time ever, the Swiss Re Institute said Thursday in a market outlook.
Climate Change Risk
Swiss Re said climate change posed the greatest long-term threat to the global economy, adding that up to 18 percent of the world’s GDP could be lost to climate change by 2050 if no mitigating action were taken.
It said the risks from secondary dangers, such as floods or wildfires, were growing in particular, also driven by urbanization which exposed ever larger numbers of people and assets to extreme climate events.
The re-insurer also pointed to increased digitalisation as a growing risk factor, giving cyber protection as an example.
Risks Boost Premiums
«Consequently, there is a greater need for insurance protection translating into a positive outlook for premiums as these will need to reflect increased exposures,» the Swiss Re Institute said.
It also said that insurers and re-insurers needed to prepare for greater risks from inflation, wage and medical inflation in particular.
Swiss Re Chief Underwriting Officer Thierry Léger said in the press release that the company was continuing to focus on a scientific, technology- and data-driven underwriting approach to ensure adequate pricing of risk in an increasingly complex environment.
