sigma 5/2025: Shifting sands

We forecast global real GDP growth of 2.5% in 2026 and 2.6% in 2027, with US outperformance relative to other advanced economies narrowing as the labour market cools and policy uncertainty lingers.  Against this growth backdrop, we estimate that global insurance premium (non-life + life) growth will slow to an average of 2.3% in real terms in 2026 and 2027, just below the 2.5% compound annual growth rate of the last five years. Beyond 2027, we see growth stabilising at 2.3%, supported by structural drivers like rising natural catastrophe exposures and escalating liability costs in non-life.

We forecast that global non-life premiums will increase by 1.7% in real terms next year and by around 2.5% in 2027. Strong investment yields will help counter moderation in earnings. Global life premium growth, meanwhile, will average an estimated 2.3% over the next two years as demand normalises at above pre-pandemic levels. Structurally higher long-dated bond yields will provide a tailwind for profitability.

An evolving political economy with heightened reliance on industrial policy is one of many structural regime shifts taking hold over the longer term. Likewise looser fiscal and monetary policy, which should cushion global growth against the impact of trade tariffs, but could also bring inflation pressures.

Such shifting sands impact insurance business too. For example, elevated inflation would weigh on real incomes and savings, with insurers exposed through the erosion of premiums and reserves, and rising claims costs.  Another regime shift underway is increasing fragmentation of geoeconomic and financial systems, which is reshaping the operating landscape for insurers. Fragmentation will likely make insurance costly and could reduce risk pool and diversification options. 

Read more about the structural regime shifts and their impact on insurance business in our latest sigma, available on the sigma explorer client portal.