Cat pricing to remain under pressure

Catastrophe reinsurance pricing is likely to remain under pressure at the 2015 renewals, with the pace of decreases expected to slow afterwards.

This is according to Swiss Re’s report on the insurance outlook for 2015 which added that for reinsurers, premium growth is expected to be lower than in the primary non-life sector. This is mostly due to reduced reinsurance buying in China and softening property catastrophe reinsurance rates.

It added that the global economy is expected to strengthen modestly next year, although prospects for different regions are mixed. Growth rates are expected to increase in the US, the Euro area and a number of emerging markets but countries such as the UK, Japan and China will slow.

“Non-life insurance premiums are expected to grow 2.8 percent in 2015, supported by strong economic activity in emerging markets. The life insurance sector will be notably stronger in both the advanced and emerging markets, and global in-force premiums are forecast to increase by 4.8 percent this year and by around 4 percent in 2015 and 2016,” said the report.

Kurt Karl, Swiss Re chief economist, said: "Stronger economic activity will improve insurance premium growth, particularly in the emerging markets. But profitability will still be challenging because of the low investment yields.”