Strong growth and record premiums are projected for the global insurance industry, as demand for risk protection increases, according to Swiss Re Institute’s latest sigma study.

The global insurance market is set to exceed $7 trillion in premiums for the first time by mid-2022, which will happen earlier than expected, said the study, noting that insurance premiums are expected to grow by 3.4% in real terms in 2021, 3.3% in 2022 and 3.1% in 2023.

This rapid growth reflects rising risk awareness in both the life and non-life segments in wake of COVID-19 pandemic and continued strong rate hardening in non-life insurance commercial lines, Swiss Re said in the report titled, “Turbulence after lift-off: global economic and insurance market outlook 2022/23.”

Swiss Re Institute estimates that global non-life premiums will grow by 3.3% in 2021, 3.7% in 2022 and 3.3% in 2023. Further, property-catastrophe rates are forecast to improve in 2022 after above-average losses in 2021. Casualty rates also should be stronger next year due to ongoing social inflation while personal lines are expected to benefit from early signs of improving motor pricing in the U.S. and Europe.

“Market conditions suggest that positive pricing momentum will continue across all lines and regions. Inflation-driven higher claims development in all lines of business, continued social inflation in the U.S. and persistently low interest rates will be the main factors for market hardening,” said Jerome Haegeli, Swiss Re group chief economist, who was quoted in a summary of the report.

The outlook for the insurance industry is also boosted “by a strong cyclical recovery from the COVID-19 shock, but economic growth is expected to slow in the next two years due to an unfolding energy price crisis, prolonged supply-side issues, and inflation risks,” said the study.

Swiss Re Institute’s sigma study forecasts that global GDP growth will be strong in 2021, at 5.6%, slowing to 4.1% in 2022 and 3.0% in 2023. Inflation is the prevailing near-term macro risk, fueled by the energy crisis and prolonged supply-side issues, the study said, noting that price pressures are expected to be most acute among emerging markets and in the UK and U.S.

The sigma report can be downloaded via Swiss Re’s website.

*This story ran previously in our sister publication Insurance Journal.