July 3, 2022
  • July 3, 2022

Climate change fuels rise in property insurance: Swiss Re

By on September 7, 2021 0

Acts of God? Climate change will drive demand for protection against rising seas and extreme weather events, says Swiss Re

ZURICH – Climate change will help property insurance premiums triple over the next two decades, according to a study released Monday by Swiss Re.

More frequent and stronger weather events, rising seas and wildfires caused by human-induced changes in the global climate will see the demand for insurance protection for buildings and infrastructure grow faster than other segments of the industry, he said.

This trend will reinforce long-term changes driven by urbanization and rising affluence in emerging economies, the company said in a report for September’s annual reinsurance industry gathering in Zurich.

Swiss Re, which provides insurance to other insurance companies, has set out to forecast the major trends driving the industry through 2040.

According to his study, while P&C reinsurance premiums combined will more than double to $4.3 trillion (€3.6 trillion), P&C reinsurance premiums are expected to nearly triple.

At $1.3 trillion in 2040, real estate-related premiums will account for 29% of all premiums collected, up from around 25% in 2020, he said.

With more people living in cities and growing wealth in emerging economies, more homes, rail lines, power plants and other critical infrastructure will need protection. Real estate premiums were around $450 billion in 2020.

Motor insurance’s premium share, on the other hand, is expected to decline to around 32% from 42% in 2020, even if the absolute number increases sharply.

For one thing, rising wealth in emerging economies will see more people who can afford a vehicle. On the other hand, technology – such as assisted driving – and new forms of mobility – scooters, electric bicycles and shared ownership – will reduce the demand for insurance.

Auto insurance premiums are expected to double to about $1.4 trillion from $766 billion in 2020.