Global Growth Impacted by US Tariff Policy: Swiss Re

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 world’s largest insurer Swiss Re.

In its latest report entitled “World insurance in 2025: a riskier, more fragmented world order,” Swiss Re Institute said that the 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 and to be an average 40 basis points (bps) lower in advanced markets this year at 1.3%.

Swiss Re forecasts primary global life insurance premium growth to slow to 1% this year in real terms, after a strong 6.1% gain in 2024. The life markets in both advanced and emerging regions will likely grow below trend in 2025, recovering in 2026.

Policyholders are cautious amid high uncertainty, tilting demand towards saving products that offer a store of value. We expect global life insurance premium volumes to reach $5.1 trillion by 2035, primarily driven by saving premium rises, the report noted.

Global growth should be stable since other major economies are indicating they will respond to the US trade shock with greater fiscal and monetary easing. However, this will likely create upside inflation risks too, the report said.

Large-scale fiscal stimulus represents a structural upside risk to the outlook for sovereign bond yields. At the long end of the yield curve, an initial US “risk premium” is evident and may continue to grow.

“In our view, such duration risk is still under-priced, particularly for investors with asset-liability models. US tariffs impact the primary insurance industry through premium growth, claims and investment returns, with differing effects by geography.

Swiss Re said that it sees the greatest and most direct impact on non-life claims severity in the US, most notably in US motor and construction, though these should be manageable. Outside the US, tariffs are more likely to be disinflationary, 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. Life insurance sees primarily indirect consequences via financial and labour markets.

The long-term regime shift towards fragmentation of economies and markets implies serious risks and costs for insurance. Trade barriers and supply chain disruptions or reshoring may push up inflation for prolonged periods, feeding into higher claims costs.

Capping Free Capital Inflows

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.

For example, after the exceptional 2005 US hurricane season, 12% of the US insurers received reinsurance payments equal to 100% of their equity, and 23% received payments exceeding one-third of equity.

Fragmentation could also reduce the insurability of such peak risks. 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.

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

Localised pricing strength remains in areas such as the US casualty due to their higher loss cost trends, but will likely not be sufficient to offset the overall growth downtrend.

“Still improving 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,” the report said.