Global premium growth will slow this year and next before recovering in 2018, according to Swiss Re’s latest insurance review and outlook.

Non-life premiums, which increased 3% last year, are forecast to rise 2.4% this year and 2.2% next year, before rebounding to 3% in 2018.

“The [global] insurance industry faces headwinds, with moderate economic growth and still ample capacity in the markets creating a challenging pricing environment,” Swiss Re Chief Economist Kurt Karl said.

“Nevertheless, premium volumes continue to grow, in both the advanced and emerging markets, along with economic activity and an increase in the insurance penetration rate particularly in emerging markets.”

Across advanced countries premium growth has decelerated to 1.7% this year from 2.5% due to weaker economic growth and a softer pricing environment in commercial cover. Growth is expected to slow further to 1.3% next year before reaching 1.9% in 2018.

US underwriting profitability deteriorated in the first half of this year while remaining stable in Europe, according to Swiss Re.

Underwriting results deteriorated in Japan, mainly due to the Kumamoto earthquake and losses in auto cover.

The reinsurer says premiums in Australia will decline 0.4% this year after struggling to a 0.5% increase last year. They are tipped to rise 0.6% next year and advance further in 2018, with a 1.4% gain.

Global reinsurance premium growth is expected to be 2.7% next year and 2.9% in 2018, based on increasing cessions from emerging markets.

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