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Global growth is slowing as US tariff policy reduces trade and heightens geopolitical uncertainty, which ultimately will lead to decelerating growth in insurance premiums, according to Swiss Re.

Global GDP growth (adjusted for inflation) is expected to slow to 2.3% in 2025 and 2.4% in 2026, down from 2.8% in 2024, Swiss Re Institute in its report titled “.”

The global insurance industry (life and non-life) is expected to follow the trend with total premiums slowing to 2% this year from 5.2% in 2024, and picking up marginally to 2.3% in 2026, Swiss Re said.

“U.S. tariffs create new risks for insurers, with negative impacts expected through inflation, trade, supply chain and economic growth outcomes,” the report said.

Property/Casualty Sector

“The primary non-life insurance sector is seeing decelerating premium growth as insurance pricing softens and policy uncertainty cuts economic momentum,” said Swiss Re, forecasting 2.6% growth in real terms in 2025 (versus 4.7% in 2024) and 2.3% in 2026.

Real premium growth in advanced markets reached 4.5% in 2024, higher than the 3.8% reported in 2023 as well as the previous 10-year average of 3.5%, the report said, noting that the decade-high growth in 2024 was driven by rate hardening, with insurers increasing prices to cover rising claims severity.

Global life premium growth will also slow down – forecast by Swiss Re to drop to 1% this year in real terms, after a strong 6.1% gain in 2024.

Localized Pricing Strength

While the U.S. tariffs will affect the insurance industry differently across geographies, they likely will increase U.S. loss trends the most, Swiss Re said, noting that U.S. motor and construction claims are due to see the greatest and most direct impact, but the effects should be manageable.

However, there will be some localized pricing strength in lines such as U.S. casualty due to higher loss cost trends, but this is unlikely “to offset the overall growth downtrend.”

Outside the U.S., Swiss Re predicted that tariffs are more likely to be disinflationary, thereby reducing pressure on claims. “Premium growth will likely be lower in the environment of economic slowdown, more so in trade-exposed areas such as marine and trade credit insurance, and in sectors like construction.”

Some Opportunities

On a more positive note, Swiss Re said, the tariff crisis may provide some underwriting growth opportunities. “A heightened awareness of risk typically benefits insurers, provided that the economic shock is not severe. This is particularly the case for lines of business offering protection against economic and financial disruption, such as credit and surety insurance.”

In addition, marine insurance outside the U.S. could benefit from realignment of supply chains “if other economic blocs increase trade among themselves,” the report explained.

Investment Results to Drive Profits

Swiss Re said that investment results will be a key driver of property/casualty (P/C) sector profitability in the next three years. “We see global P/C underwriting results broadly stable at around 1.5% to 2% of net premiums earned, and we estimate industry return on equity (ROE) at 9.7% from 2025 onward.”

“While insurers’ profitability outlook is still benefiting from rising investment income, we expect tariffs to slow global GDP growth, and consequently weigh on insurance demand. 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,” said Jérôme Haegeli, Swiss Re’s group chief economist, .

Stagflationary Shock

The report warned that tariff rates – the highest since the Great Depression – will create a stagflationary shock for the U.S. economy. (Stagflation refers to an economy simultaneously hit by slow or no growth, high unemployment, and rising prices/inflation).

“The volatile nature of US policy changes under the current administration has ushered in a paradigm shift of diminished confidence in the U.S. government, eroding its status as a ‘safe haven’ for global capital,” said the reinsurer in a press release accompanying the report. “Consequently, Swiss Re Institute has lowered growth expectations for most major economies in 2025.”

Fragmentation a Danger

The word “fragmentation” or “fragmented” is used 43 times in the report because the fragmentation of geopolitics, economies and markets could have serious long-term risk and cost impacts for insurers and society.

“Trade barriers and supply chain disruptions or reshoring may push up inflation for prolonged periods, feeding into higher claims costs. Restrictions on free capital flows for re/insurers can lead to inefficient capital allocation, higher capital costs, and higher insurance prices, possibly curtailing insurability of peak risks,” the report added.

Swiss Re cited the example of the “exceptional” 2005 US hurricane season, when 12% of US insurers received reinsurance payments equal to 100% of their equity, and 23% received payments exceeding one-third of equity.

(In 2005, Hurricane Katrina hit the Gulf Coast of the U.S., causing catastrophic damage in Louisiana and Mississippi, which Swiss Re described as a “watershed event” for the insurance industry, in a . With an insured price tag of US$105 billion at 2024 prices, Katrina is the most expensive natural catastrophe for the global insurance industry on record, Swiss Re confirmed.)

Swiss Re warned (in its world insurance report, published on July 9) that fragmentation could reduce the insurability of such peak risks and would likely lead to limited underwriting capacity, which in turn would raise insurance prices.

“Political fragmentation reduces international cooperation on mitigating critical global risks such as climate change, pandemics, and cyber risks, increasing global exposures. Society ultimately bears the cost of fragmentation as firms and individuals have less insurance coverage, keeping protection gaps wide.”

Topics Trends USA Pricing Trends