Insurers worldwide will see improvements in a far stronger way than after the last financial crisis.
According to new projections from insurer Swiss Re AG’s chief Americas economist, the worldwide insurance industry recovery will happen faster and stronger than was the case following the 2008 financial crisis.
This, despite the barriers currently faced such as inflation risk and low interest rates.
Unlike following the financial crisis, this insurance industry recovery doesn’t include harm to the overall capitalization of insurers, or to their financial strength overall. This will make it possible for insurers to be able to write new coverage and boost their revenue, said a recent Reuters report citing economist Thomas Holzheu.
Following the 2008 financial crisis, it was more challenging for insurers to write new policies as they were battling with massive capital losses, sluggish economic growth and crumbled individual and business incomes.
Individuals and businesses are in a stronger position, allowing for a more powerful insurance industry recovery.
Alternately, individuals and businesses today have received more stimulus and support program money from the government than was available in 2008. Moreover, they are more aware of the importance of purchasing coverage against risks, added Holzheu.
“We see a much stronger, more resilient demand for insurance – last year, this year, and we expect for the next few years – compared with the financial crisis, when the industry was a part of the financial markets issues,” he said.
The projection from Swiss Re mirrors those released by other insurers and analysts. For instance, in this year’s first quarter, worldwide commercial insurance prices spiked by an average 18 percent year over year, according to the Marsh McLennan Cos Inc insurance broker’s May data. Rates have consistently grown since the end of 2017.
Swiss Re forecasts that healthy insurance industry recovery growth will occur across the board, not just in the commercial sector. All premiums will rise by 3.3 percent this year, it said, and next year will bring another 3.9 percent. Last year’s fall was only 1.3 percent. Comparatively, the 2008 financial crisis experienced a 3.7 percent drop with a slower recovery of 0.5 percent in 2009 and 2.1 percent in 2010.