Global insurance industry to see stronger growth in 2018

The global insurance industry is expected to see nominal premium growth in 2017, but 3% growth in 2018, driven by better economic prospects in the USA and in many emerging markets, according to Munich Re. This will offset negative factors such as declining growth in the Chinese market. In the longer term, said Munich Re, the emerging markets of Asia will have the greatest growth potential, and their share of primary insurance premiums is expected to be on a par with that of western Europe in the next few years. According to Munich Re, the international primary insurance sector will grow by 4.5% per annum on average (3.0% in real terms, adjusted for inflation) in 2017 and 2018. Whilst premium income is likely to grow only nominally this year, slightly higher real growth of 3.0% is expected for 2018, in line with the global economy, said the reinsurer. It noted that projected premium growth will be slightly higher than that of 2016, and significantly exceed the average growth rate of almost 2% for the past ten years. In property-casualty business, premium volume will grow by an average of 4.0% (almost 2.5% in real terms) this year and next. The emerging markets of Asia, and increasingly also the MENA (Middle East and north Africa) region, are likely to exhibit the strongest growth rates, said Munich Re, with Europe seeing a much lower rate of expansion. “The insurance industry is now beginning to respond to mounting pressure in a number of industrialised countries. Companies have been consistently developing their business models; new products, sales channels, and coverage concepts have been cultivated for new risks such as cyber attacks; and IT systems have been modernised. As a result, new business opportunities are gradually opening up in these markets,” said Munich Re. Premium growth is forecast to increase steadily over the next two years in most regions with the exception of emerging Asia. For western Europe, primary insurance premium growth is expected to be 1.3% for both 2017 and 2018, compared to -0.1% in 2016. Eastern Europe will see growth increase to 4.0% in 2017 and 4.2% in 2018. For North America, premium growth is expected to be 1.4% for 2017 and 1.7% for 2018, down from 2.2% in 2016. Growth in Latin America will be 3.9% in 2017 and 4.7% in 2018. For MENA, growth is forecast to be 6.0% for 2017 and 6.1% for 2018, while emerging Asia is expected to decline from 20.7% in 2016 to 11.0% in 2017 and 10.2% in 2018. Munich Re said that the emerging markets are gaining more and more weight in the international insurance industry. Their share of the anticipated additional premium volume is expected to rise from 20% in 2016 to 47% by 2025. Currently, North America accounts for 31.1% of total primary insurance premiums worldwide. Western Europe accounts for 28.2%, while emerging Asia accounts for just 13.3%. But by 2025, the market share of emerging markets in Asia will be 21.4%, close to that of western Europe (24.5%). North America will remain clearly in the lead at 27.8%. Michael Menhart, chief economist at Munich Re, said: “The economies of many emerging markets, such as Brazil, but even Russia, are experiencing a significant recovery. This is leading to increased growth in property-casualty insurance. In most of the industrialised world – in the eurozone, the USA, and Japan – demand has been bolstered by a solid economic environment. We project that life insurance there will see only marginal growth owing to the low-interest-rate environment. By contrast, demand in the emerging markets will continue to rise appreciably. Growth prospects for insurers are therefore looking a little brighter worldwide.”

Global insurance industry to see stronger growth in 2018

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