The company shared its view on the state of the market ahead of renewals season and the Rendez-Vous de September 2021.
According to the institute, non-life insurance premiums are expected to be 10% higher than the pre-Covid-19 level by the end of 2021. Heightened risk trends will “increase the need for insurance protection, but also require a greater focus on evaluating and modelling, and ensuring pricing is adequate for the risks taken”.
Meanwhile, they predict heightened risk to be a key discussion point for re/insurers in the current environment, driven by longer-term trends and their implications.
Thierry Léger, Swiss Re’s chief underwriting officer, said: ”As the risk landscape evolves and risks become more complex, there needs to be an even greater focus on evaluating and modelling these risk trends and ensuring pricing is adequate for the risks taken. Therefore, the importance of underwriting capabilities is further increasing, all the more given the persistent low interest rate environment.”
Additionally, Swiss Re claims that climate change poses the biggest long-term threat to the global economy. According to Swiss Re Institute, the world economy is set to lose “up to 18% of gross domestic product from climate change by 2050 if no mitigating actions are taken”.
The company highlights the risks from secondary perils, such as floods or wildfires, which are growing, also driven by urbanisation, exposing ever larger communities and assets to extreme climate events.
It said to achieve the 2030 agenda for global sustainable development, “investments in the order of $6.9tn (£4.9tn) a year will be required”.
According to Swiss Re Institute, consequently non-life insurance premiums are expected to rise 10% above the pre-COVID-19 level by the end of 2021 to $6.9tn (£4.9tn) and will surpass $7tnn (£5tn) in 2022 for the first time ever.
Moses Ojeisekhoba, Swiss Re’s chief executive officer reinsurance, said: ”There is a clear recognition that claims’ frequency and severity is rising as demonstrated by recent natural catastrophes or cyber incidents. This means the need for protection is growing, and the industry has important work to do in offering insurance and closing the protection gap.”