Global insurance premiums exceed US$5tn for the first time
Global insurance premiums passed the US$5 trillion mark for the first time in 2018, thanks to solid growth in the non-life sector, particularly in China and other emerging Asian countries but also among advanced markets, a new industry report said.
The amount is equivalent to more than 6 percent of world GDP, underlining the very significant role insurance plays in supporting sustainable development and global resilience, said Jerome Jean Haegeli, group chief economist at Swiss Re.
Specifically, world non-life premium growth was solid at 3 percent in the past year, outpacing the historic average of 2.2 percent as advanced markets slowed and emerging markets grew, according to the report from Swiss Re Institute.
In China, non-life insurance business line saw premiums rise by 12 percent, driven by strong increases in personal accident and health insurance. This was accompanied by a solid performance in emerging Asia overall.
Meanwhile, growth in the global life sector was subdued due to shrinking markets in Europe, China and Latin America.
The Swiss Re Institute forecasts that global insurance premiums will increase by 3 percent in real terms in 2019/20, based predominantly on strong life and non-life sector growth in emerging countries.
"While global economic growth is slowing, we expect insurance demand to hold up over the next two years, and China will be the main contributor to premium volume gains in both the life and non-life sectors," Haegeli noted.
Looking forward, the non-life sector will face a fundamental structural shift over the coming decades, the report said. There will be a possible decline in premiums from motor, the dominant line of business today.
This potential decline will come as a result of the ongoing evolution of advanced driver-assistance systems and self-driving car technologies, which are expected to lead to lower claims, and so also lower premium rates and volumes in motor, the reinsurance giant said.
Also, the shift in global insurance business to Asia will remain ongoing. China consolidated its position as the second largest insurance market globally in 2018, with total premiums written of US$575 billion in 2018.
The Chinese market is currently still less than 40 percent the size of the US market (US$1.46 trillion), and is also smaller than the three largest markets in Europe combined (the UK, Germany, and France: US$ 836 billion).
However, the current shortfalls only serve to highlight the catch-up potential. Swiss Re Institute predicts that Asia-Pacific as a whole will account for 42 percent of global premiums by 2029.
China is and will remain a main driver and it is expected to surpass the US as the world's largest market in the mid-2030s. Its share of the global premiums went from 0 percent in 1980 to 11 percent in 2018, and is forecast to reach 20 percent in ten years' time, almost as high as the share projected for the whole of advanced Europe, the Middle East and Africa (EMEA).