Swiss Re Institute predicts that a potential impact of rising US tariff policy is slower global economic growth. The reinsurance colossus’ most recent “World Insurance sigma” report, published July 9, 2025 says these protectionist steps will not only hinder global GDP expansion but will also inhibit insurance premium growth internationally.
Explore how US tariffs are set to impact the global economy and insurance premium growth, as analyzed by Swiss Re. Stay informed on key economic trends.
Tariffs to Trigger “Stagflationary Shock”
The global average rate (real GDP growth) is expected to slow to 2.3% in 2025 and 2.4% in 2026, having stood at 2.8% in 2024. This slowdown has been primarily caused by the widening US tariff policy which is causing a ‘stagflationary shock’ to the US, and by extension the broader global economy, and is designed to obliterate policy uncertainty worldwide, the report states.
Jérôme Haegeli, Swiss Re’s Group Chief Economist, pointed to the short-term effect. “US consumers will be the most affected by US’ tariff policy and cut their consumption because of increased prices. This will in turn bear down on US growth which is largely driven by household consumption.” Swiss Re expects a slowdown in US GDP growth to just 1.5% in 2025 after 2.8% in 2024.
“Additional tariffs would lead to structurally higher inflation in the United States” as supply chains become less efficient and domestic industries face reduced competition from other countries, the report said. This mix of weaker growth and accelerating prices creates a thorny new world for businesses and consumers.
Insurance Premium Growth to Halve
There’s to be a ripple effect from a lightened global growth and increased uncertainty, and the insurance sector like no other will suffer. Global insurance premium development will slow down considerably to 2% in 2025, about half of the 5.2% seen in 2024, according to projections by the Swiss Re Institute. In 2026, a low partial recovery to 2.3% is expected.
Premium growth down in both life and non-life segments:
Nonlife growth of premiums is forecast to fall to 2.6% in 2025 from 4.7% in 2024 as competition in personal lines and softening market in some commercial lines.
The pace of growth in life insurance, in particular, will cool even more sharply, with premiums rising 1% in 2025, down from a 6.1% increase in 2024 — higher interest rates are set to moderate.
US tariff policy is another step toward increasing market fragmentation longer-term, which would decrease insurance affordability and availability, and thereby global risk resilience, Haegeli cautioned.
Trade barriers potentially leading to higher claims costs for insurers and supply chain disruptions, and cross-border flow of capital restrictions on reinsurers that may lead to capital allocation inefficiencies and higher capital costs and, ultimately, higher insurance pricing, are cited in the report.
Uneven Impacts and Emerging Opportunities
While the tone is in general cautious, the report states that the impact of tariffs on the insurance sector is likely to depend on geographic regions and lines of business.
- US Motor Physical Damage This insurance sector is anticipated to bear the brunt of the tariff rise with auto parts and new/used cars prices surging and hence higher claims severity. Swiss Re predicts US motor damage repair and replacement costs will rise by 3.8% in 2025.
- Our commercial property and homeowner and engineering lines in the US could also experience an increase in claims severity coming from higher costs for the intermediate goods, machinery, and commodities.
- Tariffs outside the US are usually thought to be more disinflationary and could reduce claims pressure.
- But the added uncertainty and economic disruption could also present opportunities, and credit and surety insurance that guard against economic disruption might be in higher demand. Alives could affect marine insurance as well, given changes to trade routes and supply chain realignments.
Notwithstanding the decline in premium growth, Swiss Re says that the overall profitability position of the global insurance industry remains robust, benefiting principally from ongoing investment income gains.
Yet the report is a stark reminder of how international trade policies and protectionism can have such widespread economic implications for wider global growth and important sectors, such as insurance.
Leave a Reply