Swiss Re forecasts steady growth for non-life reinsurance

The reinsurance market is seen to return to a more sustainable level of risk-adjusted pricing.

Swiss Re emphasizes the importance of enhancing underwriting data, improving modelling, and rebalancing the insurance value chain to sustain a healthy reinsurance market as risk awareness and the demand for re/insurance continue to rise. 

Before the anticipated renewal discussions between insurers and reinsurers in January next year, Swiss Re shares its perspective on the current state of the industry and highlights key market trends. 

It anticipates that the primary themes will revolve around the increasing demand for re/insurance protection in a volatile environment and the ongoing need for risk-appropriate returns.

In this context, the non-life reinsurance market is expected to outpace gross domestic product growth, primarily driven by factors such as inflation and urbanisation. 

The 10-year outlook for the market in US dollar suggests nominal growth of around 5.4% per year or approximately 3% when adjusted for inflation.

After experiencing years of weak performance and heightened natural catastrophe activity, the reinsurance market is returning to a more sustainable level of risk-adjusted pricing. 

This trend is anticipated to continue in the upcoming January 2024 renewals.

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Urs Baertschi, CEO of Property & Casualty Reinsurance at Swiss Re, highlights the importance of strong partnerships, enhanced underwriting data, and a rebalancing of risk sharing between insurers and reinsurers for a sustainable industry and the core function of reinsurance as a shock absorber for peak risk events.

The evolving landscape of natural catastrophe risks necessitates adaptations in underwriting. Increased losses from natural catastrophes are impacting the property re/insurance market significantly. 

The discussion will focus on finding the right balance between reinsurance capacity and growing demand, particularly in light of the changing risk profiles and increased insured losses. Swiss Re emphasises the importance of data transparency and investment in predictive capabilities to manage these challenges effectively.

In the casualty market, social and economic inflationary pressures are driving up claims costs. Litigation funding and large awards are on the rise, necessitating greater data transparency to understand emerging risks and navigate upcoming challenges effectively.

To keep pace with the evolving insurance market, greater efficiency is required.