Double-digit insurance sector growth anticipated in Asia’s emerging markets until 2017
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.
Munich. Overall, the global primary insurance sector is expected to grow by around 4% (3% when adjusted for inflation) on average in 2016 and 2017 – somewhat less than in the previous year, as stated in Munich Re’s latest Insurance Market Outlook. One reason for the marked growth despite the uncertain macroeconomic environment is the continued high catch-up potential of life insurance in many emerging markets. Whereas 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 for life insurance worldwide.
“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. 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”, said Michael Menhart, Munich Re’s Chief Economist.
Until 2025, premium growth in primary insurance worldwide is also likely to remain slightly higher than economic growth. On average, property-casualty premiums are predicted to move up by 2.9% in real terms, with growth in worldwide life insurance premiums slated at 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. 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.
According to the latest figures, in 2015 China pushed the United Kingdom from third place (behind the USA and Japan) in the ranking of the largest primary insurance markets. By 2025, China will thus probably be the world’s second largest insurance market behind the USA; China’s premium volume is set to approximately triple by then.
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