Swiss Re expects global P&C premiums to more than double by 2040 to $4.3tn
Swiss Re’s latest Sigma report has revealed that global P&C premiums are expected to more than double by 2040.
P&C premiums, currently at $1.8tn, are expected to increase by $2.5tn over the next 20 years and to $4.3tn by 2040.
Property will be the fastest growing line of P&C business, followed by liability.
Global property insurance premiums will increase three-fold to $1.3tn by 2040, with economic development being the main driver of the increase.
Property insurance covers buildings and their contents in case of fire, natural hazards and damage from other perils.
Swiss Re estimates that $616bn, or about 75%-77%, of the new global property premiums by 2040 will be generated by economic development.
Of that, $481bn, or about 78%, will come from the advanced economies, and $135bn from emerging markets.
In the future, global P&C premium growth will be slower than global GDP growth, whereas, over the past 20 years, P&C premium growth has, on average, outpaced nominal GDP.
In emerging markets, total P&C premium growth is still expected to outpace GDP growth.
The report also noted that climate risks could increase average weather-related property catastrophe losses in advanced markets by 30%-63% by 2040.
This year has already seen a high level of catastrophe losses across the globe, with Hurricane Ida recently causing major damage to part of the US.
AIR estimated onshore property insured losses from Ida would range from $17bn to $25bn, covering wind and storm-surge damage but excluding precipitation-induced flood losses.
In China, the UK, France and Germany, the increase in cat losses could be as much as 90%-120%.
For China, losses from all catastrophes are projected to increase by 100%-120%
The rising catastrophe losses from the effects of climate change will raise premiums by $149bn-$183bn, and the share of cats in property premiums will rise from 20% in 2020 to 28%-31% in 2040.
The report noted: “The impacts of climate change on property insurance emphasise the importance of risk-mitigation measures as a pre-condition to keeping some property risks insurable.
“Insurers play a key role in encouraging investment in loss mitigation. Actuarial and underwriting expertise can help measure the relative costs and benefits of mitigation decisions.”