sigma 2/2025: World insurance: a riskier, more fragmented world order

Global growth is slowing at a time of large macroeconomic regime shifts. Extreme policy uncertainty is set to persist, the main driver being US goods tariffs. Trade wars and protectionism leave no winners, but over the longer term will relocate trade and production globally. In this more fragmented world, firms and consumers face greater risks, including more volatile exchange rates and asset prices, heightened further by new developments in the Middle East conflict. We expect global GDP growth (inflation adjusted) to slow to 2.3% in 2025 and 2.4% in 2026, down from 2.8% in 2024.

US tariffs impact the primary insurance industry through premium growth, claims and investment returns, with differing effects by geography. We see the greatest and most direct impact on non-life claims severity in the US, most notably in US motor and construction. Outside the US, tariffs are more likely to be disinflationary, reducing pressure on claims.

Figure 1: CPI inflation by market and sub-category, year-on-year

Premium growth will likely slow as the global economy weakens, more so in trade-exposed areas such as marine and trade credit insurance, and in sectors like construction. Life insurance sees primarily indirect consequences via financial and labour markets. After a strong showing in 2024, premium growth in the world’s insurance industry is slowing on both the non-life and life sides, impacted by the global economy and unstable policy environment. We estimate that total premiums (life and non-life) will grow by 2% in real terms in 2025 (vs 5.2% in 2024), with marginal pick-up to 2.3% in 2026.

Figure 2: Real premium growth, total, non-life and life, 2022‒2026F