Global property and casualty (P&C) premiums are expected to more than double to US$4.3 trillion by 2040 (compared to $1.8 trillion in 2020) as the business becomes more complex, Swiss Re has predicted. In its sigma study, the insurance-based risk transfer group says P&C portfolio composition will transition from lower-risk motor insurance to higher-risk, catastrophe-exposed property and liability lines. Property insurance is expected to grow by 5.3 per cent annually as the fastest growing P&C line. Global insurance premiums stood at $450 billion in 2020, which Swiss Re predicts will reach $1.3 trillion in 2040 owing to economic development and evolving climate-related risks. In addition, liability premiums are anticipated to grow by 4.7 per cent per year on average as a result of social inflation and higher verdicts and settlements. Swiss Re notes that other long-term factors that may drive liability premiums include the impact of climate change, urbanisation, digitalisation and artificial intelligence, and social and legal changes. The study adds that as P&C business becomes riskier, there will be an increase in capital requirements and the need for reinsurance. Swiss Re highlights that collaboration between the public and private sectors is fundamental to promote conditions for sustainable growth, as well as investment in green infrastructure. Jerome Haegeli, group chief economist at Swiss Re, explains: "Promoting the conditions for long-term sustainable growth is particularly important in the face of climate change, which poses the biggest long-term threat to the global economy.” “If we are to build a sustainable insurance system that allows society to manage and absorb future risks, we need to make risks and opportunities quantifiable. Our work is also vital for policymakers with whom we share the aim of making economic growth insurable." Gianfranco Lot, head of global reinsurance at Swiss Re, adds: “P&C insurance business will become more volatile while risk modelling will become more complex, which will lead to higher capital requirements and an increased demand for reinsurance. In this fundamentally different risk environment, reinsurers will play a crucial role in keeping risks insurable.”
