Allianz Research: Insurance market set to rebound

China’s insurance market is expected to rebound this year after a dismal 2018, and will drive the global growth during the next decade, according to Allianz Research.

It is projected that the insurance sector in the world’s second largest economy will grow at 11 percent per year over the next decade, and around one third of additional global premiums will be generated in China alone during the next 10 years.

Overall, the global market is projected to grow by around 5 percent, the German insurance giant said. And it expects life insurance to grow faster again over the long term, as the world is undergoing accelerating demographic changes, particularly in emerging markets which have underdeveloped social security systems.

Allianz predicts life premiums should grow by 5.5 percent whereas property and casualty premiums by 4.4 percent over the next 10 years.

Last year, the global insurance premium volume rose to 3.65 trillion euros (US$4.06 trillion) (excluding health insurance), up by 3.3 percent compared to 2017, with property and casualty premiums outgrowing life premiums worldwide (4.7 percent against 2.5 percent).

China accounted for only 4 percent of global growth after a whopping 58 percent in 2017. Held down by a shrinking life insurance sector, China’s premiums rose by 1.2 percent last year, only the second time since the turn of the century that it trailed behind global growth.

The Chinese life market — which accounts for two thirds of the premium pool (without health) — shrank in 2018 by 3.4 percent. The property-casualty business, on the other hand, clocked healthy growth of 10.3 percent last year.

Allianz said the main culprit for this performance was Chinese regulators’ crackdown on insurance intermediaries selling wealth management products.

“2018 does not mark the end of the Chinese growth story,” said Michaela Grimm, economist at Allianz Research.

Grimm said the stricter oversight is “more than welcome,” as it signals the next phase of a more balanced and sustainable development.

 “China is the market to watch,” he added. “Coupled with the breathtaking technological progress in the market, it’s the best place to learn about the future of our industry.”