In a recent report by Stonybrook, it has been projected that the global property and casualty (P&C) insurance market will experience significant growth, surpassing $3.3 trillion in annual Gross Written Premiums (GWP) by the end of the 2020s.
However, the outlook has shifted dramatically from previous expectations, as the BRICs (Brazil, Russia, India, and China) are no longer on track to outpace the wealthy G7 countries.
A decade ago, the prevailing consensus predicted that the BRICs economies would surpass the G7 economies in size during this decade. At that time, the BRICs accounted for only 56% of the G7 economies, with a total GDP of $14 trillion compared to the G7’s $25 trillion.
The BRICs had been growing at a rate over three times faster than the G7, leading to speculation that they would overtake their wealthier counterparts.
However, the global economy has taken an unexpected turn since then. The US and EU were grappling with the aftermath of a collapsed housing bubble, while the BRICs experienced a slowdown in their growth rates.
As a result, the projected trajectory has deviated from previous expectations, and the BRICs are no longer anticipated to surpass the G7 economies in the current decade.
Stonybrook’s analysis indicates that the global P&C insurance market will witness substantial growth, expanding by over a third, equivalent to $800+ billion, in the balance of the 2020s.
Much of this growth is expected to occur in the developing world. Nonetheless, barriers to entry in many of these countries continue to limit the access of non-indigenous insurers and reinsurers, thereby reducing the market accessible to Western-world insurers to approximately $400 billion.
Within this accessible market, approximately three-quarters of the growth, amounting to around $300 billion in GWP, will be concentrated in the English-speaking world and the members of the EU/EEA.
These regions offer favourable opportunities for expansion and represent crucial markets for insurers seeking profitable growth and a lower cost of capital.
