Market outlook ‘evolving’ as premiums ease, tariffs loom: Swiss Re

The outlook for the U.S. property/casualty insurance sector is “evolving,” with profitability likely to decrease slightly as strong premium growth, easing inflation, low claims severity, and other trends that benefited insurers last year diminish, according to a report released Tuesday by Swiss Reinsurance Co.

The industry will likely report a 10% return on equity in 2025 and 2026, down from 11% in 2024, as increased competition depresses premium growth and higher import tariffs increase claims costs, the report said.

In addition, the California wildfires that began in January depleted nearly half the industry’s annual catastrophe budget, Swiss Re said.

“Reserve adequacy remains another key unknown for future industry profitability. Downside risk from underestimating past liability claims materialized as $16 billion of reserve additions in 2024,” the report said.

Tariffs could lead to higher prices for goods and wage inflation, which would lead to higher premium rates. However, that could be offset by slower economic growth, Swiss Re said.