Global insurance premium growth totalled 3.1% in 2016, a decline when compared with the previous year, and with much of the expansion coming from China and other emerging markets, according to the Swiss Re Institute’s latest sigma study.
Global insurance premium growth declined from the 4.3% reported in 2015 to 3.1% in 2016, despite global economic growth of just 2.5% during the year. Global, non-life premium growth in 2016 declined to 3.7% from the 4.2% recorded in 2015, while global life insurance premium growth totalled 2.5%, compared with 4.4% in 2015.
Slowed growth in advanced economies, says Swiss Re, was the main driver of reduced global insurance premium growth in 2016, although emerging market growth did contract in some areas as well. But despite this, it’s clear from Swiss Re’s study that emerging markets, and in particular China, is driving much of the life and non-life global insurance premium growth.
Deservedly so, Swiss Re notes how the China “growth engine steams ahead” in both life and non-life markets, with the country boasting the world’s third largest insurance market in 2016, in terms of total insurance premiums written, compared with a ranking of 16th in the year 2000.
In the life sector in 2016, China was responsible for much of the premium growth, contributing 2.4% of the global 2.5% growth in premiums, with the remaining 0.1% coming from all other markets combined.
“The life sector in China is growing very rapidly,” says Kurt Karl, Swiss Re’s Chief Economist.
In the global non-life sector in 2016 China reported premium growth of 20%, which Swiss Re says was the main driver of emerging market non-life premium growth of 9.6%, which is above the ten-year average of 8.3%.
“The emerging markets will likely fuel improvement in life premiums in the coming years, with China and India being the main growth drivers. Non-life premium growth is expected to remain moderate, with stronger economic activity in the advanced markets supporting momentum,” explains Swiss Re.
The majority of global insurance growth is clearly coming from China at the moment, with much of the emerging markets’ 14% total global premium growth in 2016 coming from the region. Growth in advanced markets is clearly feeling the pressures of low interest rates, slowed economic growth and high competition. And while Swiss Re expects global premium growth to improve, it does underline an expected continuation of profits being under pressure.