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China and Asia Engines for Insurance Growth – Swiss Re

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Emerging markets will remain the growth engine for the global economy and the insurance industry over the next decade, according to the latest sigma report from Swiss Re Institute, published in March 2019.

The study explores how the seven largest emerging markets will contribute more than 40% of global growth in the next decade, with China accounting for over a quarter of the global output. (The seven largest emerging economies in terms of gross domestic product are China, India, Brazil, Russia, Mexico, Indonesia, and Turkey.)

The report also examines the factors that will drive insurance premium volume growth in emerging markets over the next 10 years. In this period, emerging market premiums are forecast to more than double, outpacing growth in advanced markets by four times.

China is set to take over as the largest insurance market in the world by the mid-2030s. (According to sigma 3/2018, China overtook Japan as the second largest insurance market in the world in US dollar terms in 2017, with premium volumes of USD 541 billion. The US is the largest market with premiums of around USD 1.4 trillion (2017 value).)

More stable growth, amid cyclical and structural challenges

Emerging markets currently face cyclical and structural challenges, but they remain an attractive growth proposition relative to the advanced markets. The shift to relatively slower growth will be accompanied by more stable economic growth, a shift from quantity to quality.

China and emerging Asia to remain the engines of insurance growth

Insurance demand has a strong positive relationship with economic growth. The economic slowdown in emerging markets in recent years has not translated into a corresponding drop off in premium growth, and underlying consumption momentum for insurance has not been fundamentally eroded.

This sigma forecasts that the emerging market share of global premiums will increase by about 50% over the next 10 years, with the long-term premium growth rate for emerging markets 5 percentage points higher than that for the advanced markets.

The growth rate in emerging Asia is forecast to be three times the world average over the next two years and China remains on course to be the biggest insurance market by the mid-2030s. Growth in the Latin America and Central and Eastern Europe insurance markets is also projected to accelerate.

This will be spurred by factors such as growth-enabling regulation, the adoption of technology, ongoing urbanization, and a push for financial inclusion.

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