ZURICH, Nov 22 (Reuters) - Growth in the general insurance sector will slow next year as modest expansion in advanced economies and competitive pricing put pressure on the overall volume of premiums, Swiss Re said on Tuesday.
Growth in global non-life or general insurance premiums --which includes car cover and homeowner’s insurance as well as personal liability protection-- is forecast to ease to 2.2 percent next year from a rate of 2.4 percent this year.
The slowdown comes as a boost from emerging markets is offset by decelerating insurance growth in European markets and the United States, the world’s second largest reinsurer said in a study presented by its chief economist in London on Tuesday.
“The insurance industry faces headwinds, with moderate economic growth, and still ample capacity in the markets creating a challenging pricing environment,” Chief Economist Kurt Karl said in a statement.
“Nevertheless, premium volumes continue to grow, in both the advanced and emerging markets along with economic activity and an increase in the insurance penetration rate, particularly in emerging markets.”
In 2018, growth in non-life premiums is forecast to pick up to 3 percent, as rising commodity prices and increased economic activity in emerging markets spur demand.
Swiss Re said China’s massive $40 billion global investment programme in railways and power grids would lead to increased demand for commercial insurance.
It added that in emerging Asian markets, general insurance premiums are expected to grow by 8 percent in 2017 and 9 percent in 2018. Emerging markets overall would see growth rise from an estimated 5.3 percent rate in 2016 to 5.7 percent next year and 6.7 percent in 2018.
Steep falls in growth rates in the United States, Britain and Germany would see general insurance premiums rise 1.3 percent in advanced markets in 2017 compared to an estimated 1.7 percent in 2016.
Swiss Re said Donald Trump’s election as the next U.S. president was unlikely to have a major impact on insurance markets over the next two years, and hadn’t been explicitly incorporated into its forecasts.
Life insurance premiums were expected to grow by 4.8 percent in 2017 and 4.2 percent in 2018, Swiss Re forecast.
Non-life reinsurance premiums were forecast to grow 2.7 percent in 2017 and 2.9 percent in 2018, while life reinsurance premium growth would slow to 1 percent in the next two years from 1.5 percent in 2016. (Reporting by Brenna Hughes Neghaiwi; Editing by Alexandra Hudson)