ZURICH (AFP) - Climate change will help propel a threefold surge in property insurance premiums over the coming two decades, according to a study published on Monday (Sept 6) by Swiss Re.
More frequent and stronger weather events, rising seas and wildfires driven by man-made changes to the world's climate will see demand for insurance protection for buildings and infrastructure grow faster than other segments of the industry, it said.
That trend will reinforce long-term shifts driven by urbanisation and rising wealth in emerging economies, the company said in a report for the annual Rendezvous September reinsurance industry gathering in Zurich.
Swiss Re, which provides insurance for other insurance companies, set out to forecast the major trends driving the sector until 2040.
According to its study, while premiums in property and casualty reinsurance combined will more than double to US$4.3 trillion (S$5.8 trillion), those for property alone are set to almost triple.
At US$1.3 trillion in 2040, property-related premiums will account for 29 per cent of all premiums collected, up from about 25 per cent last year, it said.
With more people living in cities and growing wealth in emerging economies, more homes, rail lines, power stations and other critical infrastructure will need protection. Property premiums stood at around US$450 billion last year.
The share of premiums from motor insurance, on the other hand, is expected to decline to around 32 per cent from 42 per cent last year, even as the absolute number grows strongly.
One the one hand, rising wealth in emerging economies will see more people who can afford a vehicle. On the other, technology - such as assisted driving - and new forms of mobility - scooters, e-bikes and pooled ownership - will reduce demand for insurance.
Motor insurance premiums are expected to double to around US$1.4 trillion, from US$766 billion last year.