Insurance Market Outlook

Global primary insurance premiums are expected to increase by €370bn to almost €4.7tn by 2020.

This corresponds to an average growth of 4.2% p.a. (in real terms, inflation adjusted, 2.7%). The persistent trend witnessed since 2016 is therefore likely to continue, whereby the insurance industry grows at a slower rate than the economy as a whole (expected GDP growth until 2020: nominal 4.4% p.a., real 2.9% p.a.).

We expect the global premium volume in primary insurance to reach almost €7.5tn by 2030.

The increase over the next 12 years should thus be in excess of €3tn. A full third of this amount is set to stem from  China, and more than €600bn from the USA. 

The bleak economic prospects are also affecting the outlook for property and casualty primary insurance in 2019/2020.

After strong growth in premiums in 2018, in part due to high losses from natural disasters, we expect solid increases in premiums in the largest market, the USA, to continue at the average rate of the last few years.

Emerging nations in Asia are likely to remain the growth frontrunners, despite the economic slowdown in China.

In Western Europe, we anticipate continued modest growth, while increases in Latin America are being driven by the economic recovery in Brazil. 

Special effects: global premium growth in life and health insurance was negatively influenced in 2018, primarily by a regulatory one-off effect in China affecting high-interest, short-term asset management products. A sharp decline in pension products in Brazil led to an overall negative growth rate in Latin-America.

We expect both of these countries to recover in 2019. In general, the low interest environment in industrialised countries continues to check the prospects for life insurance. We still see catch-up potential in many emerging countries. 

In the leading growth markets of Indonesia, Russia and China, the high rates of growth of life and health insurance over the last few years is likely to continue.

In industrialised countries, private sector pensions should become more important due to demographic change. In the long term, premium growth is only likely to be higher than in the base scenario shown here if the insurance industry responds with a new product range.

In all regions, insurance density is higher for life and health insurance than for property-casualty.

Clear differences are apparent between industrialised countries and emerging markets – both today and probably in 2030 as well. The main drivers of this are the persistent major differences in terms of per capita income.

In life and health insurance, insurance density is also strongly influenced by savings patterns and the architecture of pension and health systems. In general, the better the state pension, the less is spent on private insurance covers.

Even though growth rates in the USA should remain moderate up to 2030, it will probably remain the world’s largest insurance market because of its high premium volume.

However, China – already in second place today – will gain significantly in terms of volume over the next few years, closing the gap on the frontrunner.

Other emerging markets will not make it into the Top 5 by 2030. In all likelihood, Japan, the UK and France will maintain their third, fourth and fifth places respectively.