Global insurance premium volumes will recover to pre COVID-19 crisis levels in 2021, according to a Swiss Re, in spite of a sharp slowdown in demand this year due to the pandemic.
The reinsurance giant said that it believes global life premiums will contract by 6% and non-life by 0.1% this year.
In life, saving products will be hardest hit; in non-life, travel and trade related lines will suffer most.
But “led by China, emerging markets will underpin global market strength with total premiums up 1% this year and 7% in 2021”, Swiss Re said.
The latest Swiss Re Institute’s “sigma” report says that while the “sharpest economic contraction since the 1930s” will lead to a slump in demand for insurance in 2020, total premium volumes will return to pre-crisis levels in 2021, alongside more protracted recovery in the global economy.
The report says that there will be “sector divergence”, with non-life premium volumes above pre-crisis levels, and life below.
Emerging economies, led by China, will “underpin the insurance market comeback”, the report says.
Jerome Jean Haegeli, Group Chief Economist at Swiss Re, said the insurance industry is showing “resilience” in face of the COVID-19-led economic downturn.
He said: “The magnitude of premium losses will be similar to that seen during the global financial crisis in 2008-09, even though this year’s economic contraction of around 4% will be much more severe.”
Haegli said that unlike for the global economy, Swiss Re expects a “strong V-shaped recovery” in insurance premiums, something he said will be “a remarkable showing considering that the world is currently in the throes of the deepest recession ever”.
Haegli said that while the recession will be the deepest since the 1930s, it will also be “short-lived”.
He said: “The recession will lead to a steep fall in demand for insurance. After growing by 2.2% in 2019, global life premiums are forecast to contract by 6% in 2020.
“Due to prevailing and lower interest rates, savings products will be more affected, while mortality-related covers will be more stable.”
He said that premiums in trade and travel-related insurance business such as marine, aviation and credit will be “hit the hardest”, while property and medical business will be “more stable”.
The full report is available here.