Improving Economies, Higher Prices Fuel 2021 Premium Growth

Insurers and reinsurers tracked by Gallagher Re showed an average 8 percent premium growth in 2021 and 11 percent in the year's fourth quarter.

In its "Global (re)insurers' 2021 financial results" report, Gallagher Re said that premium growth was fueled primarily by global economic improvement and favorable pricing, particularly for commercial lines.

The strongest premium growth came from the North American/Bermudan insurers and global reinsurers, Willis Re said, with both groups seeing premium growth of 13 percent to 14 percent in 2021.

Insurers' and reinsurers' combined ratios improved to an average 94.7 percent in 2021 from 97.9 percent the year prior, Gallagher Re reported. All categories of companies achieved combined ratio improvements, the intermediary said, with the greatest improvements coming from global reinsurers. The combined ratios improved despite several large natural catastrophe events during 2021, Gallagher Re noted.

The Gallagher Re report said that inflation remained one of the most discussed themes on insurers' and reinsurers' analyst conference calls. "While price increases to date have outstripped claim trends, higher material and repair costs are impacting short-tail lines, and a few companies have cited inflation when strengthening reserves for longer-tail lines," the report said.

Given the impact of inflation on materials and repair costs, insurers and reinsurers will need to maintain favorable pricing if they're to grow their margins in 2022 and 2023, Gallagher Re said. The intermediary added that inflation also has an impact on the asset side of insurers' and reinsurers' balance sheets, allowing the companies to invest at higher yields.