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Global insurance market to experience strong growth

Until 2020, the P&C market will grow to 1.85 trillion euro: Munich Re

The global insurance market will experience strong growth in the coming years, states a new report from Munich Re.

Munich Re’s Insurance Market Outlook 2013 estimates that, until 2020, the property-casualty insurance market as a whole will grow by approximately 50% compared with 2012 to 1.85 trillion euro. The life insurance market will grow by almost two-thirds to 3.1 trillion euro.

Read: Global insurance rates continued to firm in Q1

“The global economic recovery is also benefiting the insurance industry. We expect the economies of key industrialized countries to improve in the second half of 2013 and in 2014. Consequently, this will lend impetus to demand for insurance,” said Michael Menhart, Munich Re’s chief economist, in a press release.

The reinsurance company’s report concludes that growth rates will be especially strong in emerging countries. It also found that growth in the reinsurance market will be slower than that in the primary insurance industry.

Read: Premium income in Asia-Pacific to double by 2020

Nevertheless, the mature markets in North America, Western Europe and the industrialized countries of the Asia/Pacific region remain the dominating growth force. In terms of total primary insurance premiums, their share will fall back to about 73% by 2020 – around ten percentage points lower than in 2012, states Munich Re. The share generated by the emerging countries in Asia will move up from 8% to 16%.

“Approximately half of all the additional premium earned between 2013 and 2020 will come from the USA, China and Japan. In this respect, saturated markets and emerging markets both represent great potential for growth in insurance and reinsurance alike,” said Menhart.

The Insurance Market Outlook also found*:

  • Premium growth forecast for the global primary insurance market: just under 3% in 2013, just over 3.5% in 2014. In 2012, the market grew by around 1%. The chief reason for the expected growth is the predicted revival of life insurance business.
  • In reinsurance, growth was high in 2012 at 3.3%, due partly to rate increases following severe natural catastrophes in the previous years. Growth of some 1% is likely in 2013 and around 2.3% in 2014, and is predicted to be greater in life reinsurance than in property-casualty reinsurance.
  • Also in the short term, the emerging countries hold the greatest growth potential for the insurance industry. In the property-casualty segment, the strongest growth can be expected in Asia; in life insurance, Latin America is likely to post the highest growth rates in 2013/2014. Europe trails behind all the other regions in terms of growth in both classes of business.
* (all figures adjusted for inflation)
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