Climate-related risks are expected to result in a 22% increase in global property premiums, or up to $183 billion, over the next 20 years
Global P&C premiums are expected to more than double to $4.3 trillion in 2040 from $1.8 trillion in 2020, as the P&C portfolio composition is expected to shift from lower-risk motor insurance towards higher-risk property and liability lines, according to Swiss Re Institute’s sigma study, More risk: the changing nature of P&C insurance opportunities to 2040.
Property insurance is forecast to become the fastest growing line of business. Motor, although its share is shrinking, is expected to remain the largest of all P&C lines, with premiums forecast to almost double by 2040.
Property insurance is forecast to grow by 5.3% annually with global insurance premiums rising to $1.3 trillion in 2040 from $450 billion in 2020. Economic development will remain the key driver of rising property premiums, contributing 75%, or up to $616 billion of new premiums.
Climate-related risks are expected to result in a 22% increase in global property premiums, or up to $183 billion, over the next 20 years as weather-related catastrophes will likely become both more intense and frequent.
Jerome Haegeli, Swiss Re’s group chief economist, said: “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.”
As social inflation is expected to drive up the frequency of large verdicts and settlements, especially in the US, liability premiums are forecast to grow by 4.7% per year on average to $583 billion until 2040 from $214 billion in 2020.
Additional areas of long-term growth potential in liability come from climate change effects, artificial intelligence, and social and legal changes.