Emerging market insurance premiums are forecast to more than double over the next 10 years, growing four times faster than in emerging markets, according to the latest sigma report by Swiss Re.
Asia in particular is expected to grow three times faster than the world average over the next two years, with China set to become the world’s largest insurance market by the mid-2030s, the report claimed.
Swiss Re concluded that emerging markets will remain the growth engine for the global economy and re/insurance industries over the coming decade, with the seven largest emerging markets contributing more than 40% of global growth, and China accounting for over a quarter of the global output.
Growth in the Latin America and Central and Eastern Europe insurance markets is also projected to accelerate, spurred by factors such as new regulation, the adoption of technology, urbanisation, and a push for financial inclusion.
“Emerging markets will continue to outperform advanced markets in terms of growth in the next 10 years,” said Swiss Re Group Chief Economist Jerome Jean Haegeli.
“The shift in economic power from west to east will continue. As this happens, the quality rather than speed of growth becomes the differentiating factor in emerging markets,” he continued.
“At the same time, insurance markets will continue to grow at a strong pace, and China is forecast to become the largest insurance market by the mid-2030s.”
Swiss Re observed that emerging markets currently face a variety of cyclical and structural challenges, but remain an attractive growth proposition relative to the advanced markets.
The report pointed to a shift to relatively slower growth in emerging markets that will be accompanied by more stable economic growth and a transition from quantity to quality.
“Prior to the global financial crisis, the five years ahead expected growth differential between emerging and advanced markets was 4.5%,” Haegeli explained. “It is now 3.5% and this is still a comfortable growth uptick, especially in light of the lower growth levels in advanced markets.”
Swiss Re also found that the economic slowdown in emerging markets in recent years has not translated into a corresponding drop off in premium growth, while underlying consumption momentum has not been fundamentally eroded.
Jayne Plunkett, Chief Executive Officer of Swiss Re Reinsurance Asia, also commented on the report: “Insurance has long been a key enabler of economic growth. It is imperative that we continue to support governments, companies, and private citizens to fully unlock growth potential in emerging markets.”
“To do this, we need to strengthen our work creating sustainable, tech-enabled solutions that address increasingly sophisticated and urbanised emerging consumers,” she said.