Markets in Asia, and China in particular, are likely to be one of the main drivers of growth for the re/insurance industry over the next ten years, according to Christian Mumenthaler, Chief Executive Officer (CEO) of Swiss Re.
Speaking in an interview with Bloomberg TV, Mumenthaler suggested that exponential growth can be expected from many Asian markets once they have had time to develop, with countries such as India and China already beginning to exhibit this trend.
“The insurance penetration in these developing countries, it’s always the same pattern,” Mumenthaler told Bloomberg TV. “When people are too poor they don’t buy insurance at all. Then there’s a phase where GDP per person grows in a way that there’s an exponential growth of insurance and that’s where India and China are right now.”
“Within Asia, it’s particularly China that has seen extremely powerful, very big growth,” he added. “That’s because the government has seen that insurance is critical for economic growth and they have particular policies that have facilitated the expansion of insurance and therefore the reinsurance.”
Swiss Re has been active in the Asian markets for more than 100 years now and, while Asia has been a strong growth market in the past, growth rates for primary insurance in some countries are now hitting 10-20%, Mumenthaler said.
The reinsurer also considers many Asian markets to be largely resilient to economic challenges, with Asia generally representing a “bright spot” in a global economy that is beginning to lose its momentum.
“There’s also a huge so-called protection gap in these markets,” Mumenthaler continued. “Less than half is insured, so for every catastrophe we see only half of it or less gets paid by insurance.
“So there’s a huge potential here and it has to do with economic growth and willingness and ability to pay insurance premiums,” he explained. “If I look forwards ten years I think China is going to be the biggest part of that.”