Global economic growth is projected to slow over the next two years, driven in part by rising trade barriers and policy uncertainty tied to US tariff actions, as per the latest report from Swiss Re.
The latest World Insurance Sigma report forecasts inflation-adjusted global GDP growth to decline to 2.3% in 2025 and 2.4% in 2026, down from 2.8% in 2024. This deceleration is expected to extend to the insurance sector, with global total premiums projected to grow by 2% in 2025, a decrease from 5.2% in 2024, before a marginal recovery to 2.3% in 2026.
Jérôme Haegeli (pictured above), Swiss Re’s group chief economist, said that while insurers may continue to benefit from higher investment income, global GDP growth will likely weaken under the weight of US tariffs.
“In the long term, US tariff policy is another move towards more market fragmentation, which would reduce the affordability and availability of insurance, and so diminish global risk resilience,” he said.
The Swiss Re Institute characterized the tariff regime as a “stagflationary” shock for the US, with broader global implications. It noted that changes in US trade policy have led to lower confidence in the US government's economic direction, challenging its status as a reliable destination for international capital. Growth forecasts for most major economies have been revised downward for 2025 as a result.
After leading post-pandemic recovery among developed markets, the U.S. economy is projected to slow. Swiss Re Institute expects U.S. GDP growth to fall to 1.5% in 2025, down from 2.8% in 2024. Higher tariffs and less efficient global supply chains are anticipated to push domestic inflation structurally higher.
"US consumers will be hit hardest by US' tariff policy and cut their spending as a consequence of higher prices. This in turn will weigh on US growth which mostly depends on household consumption,” Haegeli said.
That said, Swiss Re forecasts that the US economy will begin adjusting to the new tariff environment in 2026, with GDP growth expected to rise slightly to 1.8%. The rebound is expected to be supported by labor market stabilization. Still, the longer-term outlook remains constrained by reduced flows of goods, services, capital, and labor, which may dampen potential economic growth.
Premium growth across the insurance industry is expected to slow significantly following a stronger year in 2024. Total global premiums are projected to grow 2% in 2025 and 2.3% in 2026.
In the non-life segment, premium growth is expected to decline to 2.6% from 4.7% in 2024, reflecting softer market conditions and increased competition in personal lines. Life insurance, which posted 6.1% growth in 2024, is forecast to grow just 1% in 2025, before improving to 2.4% in 2026 as interest rates stabilize. Profitability for insurers remains supported by ongoing investment income gains.
A previous report from Swiss Re noted that the US property and casualty insurance sector is expected to continue experiencing decelerating premium growth, paired with relatively stable profitability over the next two years.
Swiss Re also reports the sector is projected to post a return on equity of 10% in both 2025 and 2026. Premiums are forecast to grow by 5% in 2025 and 4% in 2026. These gains are expected to be driven by higher investment returns, which may offset underwriting challenges arising from economic volatility and inflationary pressures.
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