Global insurance industry poised to grow more strongly by 2018
Weaker expansion expected in P&C industry
Overall, the international primary insurance sector will grow by 4.5% per year on average (3% in real terms, as in adjusted for inflation) in 2017 and 2018, according to Munich Re. “Whilst premium income is likely to grow only nominally this year, slightly higher real growth of 3% is expected for 2018. Premiums in the insurance sector are therefore likely to evolve in line with the global economy, which should show real growth of 2.9% in 2017 and 3.1% in 2018. Projected premium growth will thus be slightly higher than that of 2016, and significantly exceed the average growth rate of almost 2% for the past ten years.”
“The economies of many emerging markets, such as Brazil, but even Russia, are experiencing a significant recovery,” says Michael Menhart, chief economist at Munich Re. “This is leading to increased growth in property-casualty insurance. In most of the industrialized world – in the eurozone, the [U.S.], and Japan – demand has been bolstered by a solid economic environment. We project that life insurance there will see only marginal growth owing to the low-interest-rate environment. By contrast, demand in the emerging markets will continue to rise appreciably. Growth prospects for insurers are therefore looking a little brighter worldwide.”
In property-casualty business, premium volume will grow by an average of 4% (almost 2.5% in real terms) this year and next. Projected inflation-adjusted growth will thus be roughly half a percentage point below global economic growth. The emerging markets of Asia, and increasingly also the MENA (Middle East and North Africa) region, are likely to exhibit the strongest growth rates, the reinsurer predicts. The established markets of Europe and North Africa will naturally see a much lower rate of expansion.
There are many different reasons for the weaker pace of growth in property-casualty insurance. The insurance industry is now beginning to respond to mounting pressure in a number of industrialized countries. Companies have been consistently developing their business models; new products, sales channels, and coverage concepts have been cultivated for new risks such as cyber attacks; and IT systems have been modernized. As a result, new business opportunities are gradually opening up in these markets.