While global economic growth has outpaced forecasts for the first half of the year, analysts have warned that a slowdown is coming in the second half.

The Swiss Re Institute publication sigma points to high inflation levels to continue, which has implications for the insurance sector.

The report said: “High interest rates sparked bank sector instabilities earlier this year but with their sound capital positions, insurers have not been shaken by the disruptions in the financial system.

“If anything, we expect the industry to demonstrate resilience over the next two years.

“We forecast that global insurance (non-life and life) premiums will grow by 1.1 per cent in 2023 and 1.7 per cent in 2024 in real terms, after contracting by 1.1 per cent in 2022.

“And, reflecting the stirrings of market growth, we see premium volumes rising to a new high this year, in nominal terms.”

Market hardening in commercial, and now also personal, lines will be the main driver of growth in the non-life business, as insurers raise premium prices to offset inflation-induced rising claims costs.

Analysts see the motor segment returning to growth after three years of contraction, but a decline in health premiums, due to the end of the pandemic support policies in the US, could offset gains in other lines.

Jérôme Haegeli, Swiss Re's group chief economist said: "With inflation pressures still persistent, hard market conditions in non‑life are set to continue as insurers offset elevated claims costs with higher premium prices. Once disinflation takes hold with prices decreasing, less expensive claims and greater returns from interest‑rate‑sensitive investments should further support industry profitability."

Rising wages and interest rates in advanced markets are creating favourable growth and profitability tailwinds in life insurance, including demand for annuities and pension risk transfer products.

Observers also see new life risk pools in Hong Kong as a result of China's reopening. Global savings products premiums should grow, driven by an estimated 4.3 per cent gain in the emerging markets.

Life insurers have a positive profit outlook because of improved investment returns, the normalisation of Covid-19 related claims, a de-risking of pension and annuity premiums, and a stabilisation of earnings volatilities with implementation of the IFRS 17 accounting framework this year.

The sigma report notes: “On the downside, however, amid the low growth and still-high inflation environment, we flag credit downgrades and lapses as two potential tail risks for sector earnings.”