The rate of growth of the global re/insurance industry is set to overtake the global economy in 2018 and 2019, with average annual premium growth forecast at 5.3%, compared with global GDP growth of 4.9%, according to Munich Re’s latest Insurance Market Outlook.
Munich Re reported that life insurance is set to recover after a weak 2017, with projected annual premium growth of 5.6%, while property and casualty (P&C) will continue to benefit from a favourable economic environment, with projected annual premium growth of 5%.
Emerging countries are expected to act as the primary drivers of growth, although stronger rates in high-volume industrialised countries are also contributing to the positive development.
Growth rates for P&C insurance in emerging markets are forecast on average at 9.5% for 2018/2019, with particularly strong growth expected in China, the Middle East, North Africa, and some areas of Latin America.
Life insurance is generally subject to greater fluctuations than P&C, but is still forecast average growth rates of 5.6% due to an expected recovery in the U.S market, which currently accounts for around 20% of the global market share, and projected growth rates of almost 20% for China.
Developed markets will generally see moderate life insurance growth as a result of sustained low interest rates, whereas most emerging markets will experience higher growth, particularly in Eastern Europe and Latin America.
By 2030, Munich Re expects overall insurance premium volume to have almost doubled, at €8 trillion, with nearly one-third of additional premium income during this period expected to be generated from China.
The U.S will likely retain the world’s largest insurance market with a market share of 24%, with China expected to move into second place due to its strong growth rate, although this may taper off over the next few years as China’s insurance penetration is already relatively high.
InsurTech innovations are also expected to lead to a surge in premium growth in emerging markets and developing countries, although they are unlikely to significantly impact premium growth in industrialised countries, where technological innovation will be focused primarily on product innovation and value chain efficiency.
Munich Re predicts that FinTechs could generate an additional GDP of US $3.7 trillion in emerging markets by 2025, as mobile phones facilitate access to financial accounts.
For the same period, Munich Re estimated that GDP in low-income countries like Ethiopia, India or Nigeria could be boosted by as much 10-12% by FinTech integration, while middle-income countries like Brazil, China or Mexico could still benefit by around 4-5%.