Asia will remain “engine” for global insurance growth: Munich Re
“In the medium term, emerging markets in Asia will continue to drive insurance sector growth. This year and next, premium volume in life insurance in this region is likely to see double-digit growth, with that in property-casualty insurance only slightly behind,” stated Munich Re in its latest Insurance Market Outlook report.
The German reinsurance group says that overall, the global primary insurance sector is expected to grow by around 4% (3% when adjusted for inflation) on average in 2016 and 2017, a fall from the previous year.
Munich Re said that one reason for the decent level of growth despite the uncertain macroeconomic environment is the continued high “catch-up” potential of life insurance in many emerging markets.
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Property-casualty premiums are forecast to grow by close to 4% (slightly below 3% in real terms) worldwide. Growth of 4.5% (3.5% in real terms) is predicted in the global life insurance market. “The outlook for the insurance sector for the next two years has brightened, despite weaker economic development in some regions. In the medium term, many emerging markets will continue to drive growth in the insurance sector, not only in terms of growth rates but also in terms of absolute growth,” said Michael Menhart, Munich Re’s chief economist.
“By contrast, in industrialised countries, the low interest rate environment will remain the major challenge for some time to come, especially for life insurance business,” he added. Munich Re estimates that, until 2025, premium growth in primary insurance worldwide is also likely to remain slightly higher than economic growth.
The reinsurer believes that, on average, property-casualty premiums are predicted to rise by 2.9% in real terms. Growth in worldwide life insurance premiums are forecast to increase by more than 3% in real terms.
“In emerging markets, growth is also expected to gradually pick up again in property-casualty insurance, as a resurgence in demand for insurance is anticipated after the economy stabilises in countries like Brazil, Russia and South Africa,” forecasts Munich Re.
“Sustained high, but slowly decreasing, growth is forecast for the emerging markets in life insurance. In industrialised countries, moderate growth is likely to continue in the property-casualty segment,” added the reinsurer. According to the latest figures, China pushed the UK from third place (behind the US and Japan) in the ranking of the largest primary insurance markets last year.
By 2025, China will probably be the world’s second largest insurance market behind the US, said Munich Re. China’s premium volume is set to approximately triple by then, predicts the reinsurer.
