Switzerland-based leading reinsurance company Swiss Re’s chief economist Mr. Thomas Holzheu has revealed that despite difficulties such as low-interest rates and inflation risk, the global insurance business is positioned to recover more swiftly and forcefully from the pandemic than it did after the 2008 financial crisis.
The pandemic did not damage insurers’ total capitalization or financial strength, unlike the previous crisis, allowing them to write new coverage and boost income, the chief economist said in a statement.
Writing new policies was more difficult in 2009 and 2010 when insurers were struggling from capital losses, sluggish economic growth, and decreased incomes of companies as well as individuals.
Mr. Holzheu noted that businesses and individuals now have more money from government stimulus and support programs, and are more aware of the need to purchase protection against risks. “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 further added.
Swiss Re’s outlook is consistent with other favorable indicators. According to US-based insurance broker Marsh McLennan, global business insurance rates jumped 18 percent on average from a year ago in the first quarter of 2021. Rates have climbed since late 2017.
The reinsurance firm forecasts annual growth for all premiums, not just commercial, to reach 3.3 percent this year and 3.9 percent in 2022, after declining just 1.3 percent last year. “That compares with a 3.7 percent decline in 2008, during the financial crisis, and a slower rebound of 0.5 percent and 2.1 percent in 2009 and 2010, respectively,” according to the reports.