More friendly forecasts for 2024 and 2025

(kunid) Increases are forecast for both life and non-life. Positive trends are also forecast for the Western Europe region.

After a “robust development” of +2.8% in 2023, global gross domestic product (GDP) is expected to grow by 2.2% in real terms in 2024 and by 2.7% in 2025.

At least that’s what you expect Swiss Re Institute (SRI) in his just published analysis “Risk on the rise as headwinds blow stronger: Global economic and insurance market outlook 2024/25”.

For the euro area, the SRI estimate for 2023 is 0.4% growth, and the forecasts for 2024 and 2025 are 0.3 and 1.2%, respectively.

Delayed effect of monetary policy

The SRI sees “the strong labor market” as the main reason for the “robust economic development” in 2023.

“Unemployment rates in the USA (3.9% in October) and in the Eurozone (6.5% in September) were at a historically low level despite an increasing labor supply.” This has boosted consumer demand, particularly in the USA supports”.

However, the institute does not want to interpret the robust labor market as a sign of a new upswing – but rather as an “indication of the delayed effect of monetary policy”, which often only becomes noticeable on the labor markets later than in other areas of the economy.

Pressure on profit margins

“The effects of higher interest rates have not yet fully penetrated the real economy,” adds Charlotte Mueller, Chief Economist Europe at Swiss Re. Higher capital and labor costs will increasingly eat into companies’ profit margins, says Mueller.

“This could lead to layoffs. Europe’s economy will be the weakest in the next two years, and some large economies like Germany are already contracting.”

Boost for non-life…

And what predictions does the SRI make for the insurance industry? After an estimated 1.5% real premium growth worldwide in 2023, this is expected to be higher again in 2024 and 2025, at an average of 2.2% each.

In property and liability, “a far-reaching reassessment of insurance risk in 2023” will result in global premium volume growing by an estimated 3.4% this year and by 2.6% each in 2024 and 2025.

After -0.6% in 2023, health insurance is expected to turn positive again in 2024/25 (on average 1.5%).

… and for life

Finally, life insurance is expected to increase in real terms from -0.7% in 2022 and probably 1.5% in 2023 to 2.3% in 2024/25.

The SRI believes that the division should benefit from the higher interest rates. It expects “strong growth in savings products” over the next two years.

The growth engine for life insurance is primarily the emerging markets (+5.1%). However, the industrialized countries (+1.3%) also make a contribution to this development.

In 2024/25, Western Europe will also be in positive territory

As at the global level, real premium growth is also expected to increase in the Western Europe region, according to SRI analysts’ estimates: after a total of -0.4% in 2023, an average of 1.7% is expected for 2024/25.

According to the data, the industry in Western Europe can hope for an improvement from an estimated 1.1% in 2023 to an average of 2.0% in 2024/25 in the “non-life” segment, and a reversal boost of an estimated -1.8% in 2023 in the life segment an average of 1.5% in 2024/25.

With this in mind: Talk to your advisor – he will discuss the optimal insurance cover with you.

POINTNER finance… Your insurance broker in Ried im Innkreis
Questions? – Contact us!