Global P/C premiums are expected to more than double to US$4.3trn in 2040 from US$1.8trn in 2020, according to forecasts from Swiss Re Institute. Portfolio composition is expected to shift from lower-risk motor towards higher-risk property and liability lines, it predicts.

According to the organisation’s latest Sigma study, property insurance is forecast to grow by 5.3% annually with global insurance premiums rising to US$1.3trn in 2040 from US$450bn in 2020. Economic development will be the key driver, contributing 75%, or up to US$616bn of new premiums.

Climate-related risks are expected to result in a 22% increase in global property premiums, or up to US$183bn, over the next 20 years as weather-related catastrophes will likely become both more intense and frequent.

As social inflation is expected to drive up the frequency of large verdicts and settlements, especially in the US, liability premiums are forecast to grow by 4.7% per year on average to US$583bn until 2040 from US$214bn in 2020. Additional areas of long-term growth potential in liability come from climate change effects, artificial intelligence, and social and legal changes.

Jerome Haegeli, Swiss Re’s group chief economist, said: "Promoting the conditions for long-term sustainable growth is particularly important in the face of climate change, which poses the biggest long-term threat to the global economy. If we are to build a sustainable insurance system that allows society to manage and absorb future risks, we need to make risks and opportunities quantifiable. Our work is also vital for policy makers with whom we share the aim of making economic growth insurable."

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