3rd July 2022

2021 resilience recovery at risk with 2022 forecast dampened by persistently high inflation and economic slowdown-Swiss Re Institute
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Swiss Re Institute has published its new sigma Resilience Index, revealing that the world economy regained macroeconomic resilience in 2021 but the environment remains fragile. In 2021, the global economy benefited from a cyclical rebound from the COVID-19 crisis, resulting in greater capacity to respond to and recover quickly from a crisis. However, the full impact of slowing growth, high inflation and global geopolitical tensions in 2022 may throw the resilience recovery off course.
Global insurance resilience also improved in 2021 thanks to strong insurance growth supported by rising risk awareness among customers and governments' pandemic-related health spending. However, insurance resilience has not recovered to pre-COVID-19 or pre-global financial crisis levels. The world insurance protection gap for health, mortality and natural catastrophe risks combined reached a new high of $1.42tr in 2021 and the current inflationary environment is expected to widen the gap further this year. Despite a strong forecast for nominal insurance premium growth, insurance resilience is expected to weaken in 2022 due to scaled-back government benefits and declining asset values.
Jerome Haegeli, Group chief Economist of Swiss Re, comments "The cyclical recovery in both macroeconomic and insurance resilience in 2021 cannot hide the fact that deep structural reforms are needed to drive long-term growth. The current inflation shock and cost of living crisis are disproportionately affecting the lowest-income households and will only widen protection gaps this year. To secure greater resilience and support long-term economic stability, structural parameters such as infrastructure and human capital need to be strengthened and inequality reduced. Against this challenging backdrop, the insurance industry plays an important role in shifting financial risks away from individuals and ultimately increasing their resilience."
About Swiss Re Institute's sigma Resilience Index:
The Resilience Index measures how prepared societies are to absorb shocks. It includes two gauges to identify risks. The Macroeconomic Resilience Index, developed in conjunction with the London School of Economics, paints a global picture and comprises a total of ten indicators, including fiscal and monetary policy space, insurance penetration and the newly included income inequality. A second set of indices assess how insurance helps individuals, households and organisations to withstand shock scenarios in the areas of natural catastrophes, mortality and healthcare spending.

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