Global insurance premium growth is expected to slow sharply this year due to geopolitical uncertainty, supply chain disruption and continued inflation, according to Swiss Re Institute’s latest sigma report. But Swiss Re said the current underwriting cycle may prove shallower than past soft markets as rising repair costs and growing catastrophe exposures limit pricing corrections.

Swiss Re forecasts that global P/C premium will grow only 0.6% in 2026, significantly below the long-term trend of 3.6% (2015-2024 CAGR), before recovering slightly to 1% in 2027.

Advanced markets are seeing a sharp deceleration in 2026, Swiss Re said, with real premium growth slowing to near zero compared to 3.9% in 2025, marking the weakest expansion in almost two decades. The U.S. could slip into contraction (-0.5%), reflecting rate softening across most lines due to competition among insurers. Meanwhile, Swiss Re expects premium growth in emerging markets to moderate slightly to 3.3% in 2026 from 3.6% in 2025.

Swiss Re noted that Marsh’s global commercial insurance pricing index fell 5% in the first quarter of 2026, marking the seventh consecutive quarterly decline. Commercial property insurance prices dropped 9%, followed by professional lines and cyber, which were both down 5%. Casualty rates rose 3%, driven by persistent loss-cost trends from large jury verdicts in the U.S.

Personal lines prices have started softening across major markets, Swiss Re said, noting that growth is shifting from rate-driven to volume-driven as insurers compete on price and terms rather than riding rate increases. U.S. personal auto price changes are on the verge of turning negative, Swiss Re said, while homeowners insurance is still seeing mid-single-digit gains and may stay firm for longer given expanding natural catastrophe exposure and the impact of inflation on rebuilding costs.

Global P/C profitability reached a cyclical high in 2025, the study found, with return on equity estimated at 14%—well above the 7.5% cost of capital and the 2015-2024 average ROE of 7.1%. Swiss Re expects ROE to ease to 11.4% in 2026 and down to 7.7% in 2028.

Swiss Re said the current cycle may be shallower than past soft markets, with insurers likely to reprice more sharply if large losses, inflation and capital signals deteriorate beyond expectations.

Swiss Re said that inflationary pressures from the conflict in the Middle East could impact repair, replacement and liability costs, partially offsetting downward pressure on pricing.

“The latest Middle East conflict is not a one-off shock but another sign that geopolitical risk has become a structural feature of the global economy with four supply shocks in six years,” said Jérôme Haegeli, Swiss Re’s Group Chief Economist, also citing the COVID-19 pandemic, the Russia-Ukraine war and the 2025 trade tariffs.

The AI Investment Boom

The study also discussed the risks and opportunities offered by the current AI investment boom.

Swiss Re estimates that capital expenditure on AI by hyperscalers should reach $750 billion in 2026, contributing around 0.2-0.3 percentage points to U.S. growth. While the AI investment boom is adding to near-term inflation through rising demand for energy, electronic components and construction, Swiss Re said it’s also creating new demand for risk solutions across property, engineering, cyber, liability and business interruption insurance.

Ivan Gonzalez, CEO Swiss Re Corporate Solutions, said that “the AI boom is driving unprecedented infrastructure investment. Some of the largest AI data centers now carry total asset values exceeding $20 billion before technology installation, creating significant construction, operational and accumulation risks. These interconnected exposures call for solutions that go beyond traditional insurance, combining risk engineering, alternative risk transfer and financing to help businesses invest with greater resilience.”

Many of these new data centers are increasingly being built in riskier locations, Swiss Re said. The campuses are clustered where power and land are cheap, and several of those hubs rank among the most catastrophe-exposed in the United States. The study estimates that around 40% of U.S. data-center capacity sits in zones with significant tornado activity, and more than a quarter is in areas exposed to frequent large hail.

See Swiss Re Institute’s latest sigma report: “World insurance in 2026: Shock absorbers in a fragmenting world.”