Industry profits rising: implications of Trump trade policy on the insurance sector
Profits in the insurance industry are on the rise, but there are some potential challenges ahead due to Trump’s trade policy, warns Swiss Re. The good news is that general insurance profitability is looking up as the hard market levels off. Thanks to lower inflation and higher premium rates, underwriting results have been strong this year and are expected to continue into next year and beyond.
Swiss Re’s global economic and insurance market outlook for 2025-26 predicts a significant 4.3% growth in global non-life premiums, marking a decade-high. This increase is a response to higher claims and a necessary risk repricing. However, it’s worth noting that while rates are still going up, they are expected to grow at a slower pace over the next couple of years.
Natural disasters, particularly US hurricanes, continue to wreak havoc, with insured losses exceeding $100 billion for the fifth year in a row. This ongoing trend could also impact property insurance pricing in the near future.
Looking at the bigger picture, the report also addresses the potential risks posed by Trump’s trade policies after his recent election win. There is concern that global economic disparities could worsen depending on the direction the new US administration takes. The mixed implications of Trump’s campaign promises may lead to slower disinflation and a less aggressive approach to interest rate cuts.
In a worst-case scenario, a trade war could have serious repercussions, potentially triggering global supply shocks and even a recession. This would, in turn, impact the performance of non-life underwriting, leading to low premium growth and higher claims severity. Asset portfolios could also suffer losses due to market fluctuations.
It’s essential for the insurance industry to stay vigilant and adaptable in the face of these potential challenges to navigate the uncertain waters ahead.
