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INSURANCE | 05.14.2025

Growth in the insurance industry remains resilient despite trade uncertainty

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The high geopolitical uncertainty generated by the tariff war is affecting growth forecasts, especially for countries with economies more dependent on international trade, such as the United States, China, Germany, and Japan. As a result, we have seen downward revisions in forecasts for global economic growth and, therefore, in insurance activity, diminishing the bright outlook we saw at the beginning of the year.

The report 2025 Economic and Industry Outlook: Update for the Second Quarter, recently published by MAPFRE Economics, MAPFRE’s Economic Research service, highlights this increase in uncertainty regarding the growth path for insurance premiums, inflation, and monetary policy interest rates, in addition to the upturn in volatility in financial markets.

In the United States, a country that has seen its growth forecast slashed due to the President’s recent trade decisions, Non-Life premiums will see growth of 3.5% for this year and 3.3% for next year, while Life premiums will grow by 4.3% and 4.1%, respectively. These forecasts represent a significant drop compared to the report from three months ago, which forecast an increase in Non-Life premiums of 4.4% and Life premiums of 5.5% in 2025.

“This drop in the forecasts is due to the possible slowdown in private consumption due to the uncertainty generated by the trade war and interest rates that the Federal Reserve (Fed) continues to maintain in restrictive territory amid fears that tariffs may cause a rebound in inflation, which may lead to a slowdown in insurance activity,” said Ricardo González, Director of Analysis, Sectorial Research and Regulation at MAPFRE Economics.

In the Eurozone, forecasts indicate that the German economy will stagnate this year and weak growth will deepen in France and Italy. Forecasts for the insurance activity in these markets have been revised downward, with a slight acceleration expected next year, as the European Central Bank (ECB) continues with the process of monetary easing in the face of moderating inflation.

Thus, Germany’s Non-Life premiums are expected to increase by 1.9% this year compared to the 2% previously forecast, and Life premiums will increase by 2.3%. Forecasts have also been lowered for France and Italy in 2025: France will see an improvement in its Non-Life premiums of 2.2% and Life premiums of 2.9%, while in Italy, the Non-Life line will see its premiums increase by 2.2% and Life premiums by 2.7%.

Spain continues to be an exception, maintaining forecasts that predict economic growth significantly above the rest of the major economies in the eurozone, which in turn means better prospects for its insurance industry. Specifically, MAPFRE Economics expects growth in Non-Life premiums of 5.5% for this year and 4.6% for next year, while the forecast for Life premiums is 4.5% and 4.2%, respectively. Prospects for profitability remain positive in an environment of moderating inflation and interest rates that are trending downward, but at levels and with positive term premiums.

On the other hand, some of the large emerging economies are expected to be more harshly affected by the current tariff context, as is the case with the Mexican economy, which is expected to see a greater economic slowdown than forecast at the beginning of the year and a weak economic growth environment, but without entering into a recession. Mexico continues to have a moderate growth outlook for insurance activity, higher than GDP growth.

There are still good prospects in terms of profitability, both for Non-Life and Life insurance, in an environment of positive real interest rates that are expected to continue to fall with inflation under control. Thus, MAPFRE Economics forecasts that this year Non-Life premiums will improve by 6.9% and Life premiums by 4.8%.

It is estimated that other emerging economies, such as Brazil and Turkey, will be affected to a lesser extent by the trade war. Therefore, their forecasts for economic growth from the beginning of the year remain virtually unchanged, with significant increases estimated for their insurance markets, helped by the low levels of insurance penetration characteristic of these emerging economies, which are an additional element that boosts demand for insurance.

Financial income is also expected to continue contributing to a large extent to the profitability of the insurance industry and the savings-linked Life insurance business, due to the high interest rate levels that continue to be significantly higher than inflation forecasts.

 

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