Overall, we project that by 2025 primary insurance premium worldwide will rise in the same measure as economic output (by some 4.5%, or almost 3% in real terms). We therefore anticipate global premium volume of around €6.35tn for 2025. The main drivers continue to be the emerging markets, whose premium growth of almost 9.5% p.a. (7.5% in real terms) should clearly outpace economic growth (around 6.5%, or 4.5.% in real terms). We project that, at almost 5% (3.0% in real terms), long-term growth in life insurance worldwide will be higher than in property-casualty insurance, which is expected to expand by almost 4.5% (2.5% in real terms).
The outlook for the insurance markets, like that of the economy, is subject to considerable uncertainty. Economic crises can have a significantly adverse impact on premium growth, particularly in property-casualty insurance, and may even trigger a contraction – such as in Latin America in 2016. Should the current political and economic risks for the economic outlook materialise, they are likely to have a negative impact on the relevant insurance markets as well.
However, the present economic downturn in a number of emerging markets should be only temporary in nature, which leads us to assume in our basic scenario that the economic environment will stabilise in the medium term. The demand for property-casualty products should therefore rise again appreciably as per capita income increases further.
Rising living standards and a simultaneous increase in insurance coverage requirements are likely to ensure that life insurance will continue to grow strongly in emerging markets in the long term. Added to this, individual countries such as China are facing demographic challenges. It is quite natural for economic dynamic trends to decline somewhat owing to saturation effects. In most industrialised countries, an increase in interest rates might trigger a gradual revival of business, particularly since the demand for private provision remains high given their ageing societies. Further stimulus could derive from new products, which will probably focus on greater flexibility, cover for biometric risks, digitalisation in sales and risk assessment, and unit-linked as well as hybrid products.