Global insurance industry lost $55bn but premiums set to bounce back next year
The global insurance industry lost all of $55 billion as a result of the Covid-19 pandemic that has the world’s economy on hold and seen to the reversal of fortunes for many countries, but the latest Sigma study by reinsurance giant, Swiss Re is predicting a bounce back for premiums which it says will return to pre-pandemic levels next year.
The report is suggesting that despite the worst recession in history since the Great Depression and a significant drop in insurance demand this year, the sector is expected to recover faster than the rest of the global economy.
The quick recovery is being linked to emerging markets with China at the head, and they note that emerging markets will contribute to the total increase of 1% in premiums on the world market in 2020 and 7% in 2021.
“In the context of the economic downturn caused by the coronavirus, the insurance sector is demonstrating its resilience,” said Jérôme Jean Haegeli, chief economist of Swiss Re.
According to the report, the insurance sector still suffered from the pandemic, with a worldwide fall of 6% in life insurance premiums and 0.1% in premiums damage insurance, noting specifically that it is the trade and travel industries that are pulling the sector down.
The study averred that it is the non-life insurance business that will boost the entire industry with premiums higher than the pre-pandemic period, adding that life insurance premiums will remain below this level.
The estimated losses already being put out is expected to be absorbed by the strong capitalization of the insurance industry,
“Most external analyzes estimate that the maximum losses would be $100 billion, which roughly corresponds to the damage caused by Hurricanes Harvey, Irma and Maria in 2017, and the sector has also coped with this situation”, says Jérôme Jean Haegeli.
The report further stated that the pandemic corresponds to a period of rising premiums in non-life insurance, and adds that combined with the expected increase in demand, these two indicators make it possible to envisage an increase in sector revenues in the long term.