Article Synopsis :
This EY paper looks at the importance of the Asian market on the growth – and transformation – of the global insurance market.
Rapidly expanding populations across the region, combined with rising incomes have offered opportunities to insurers.
Innovation is key to the development as the Asia-Pacific markets in general and China, in particular, are leading the way in developing, but also adopting new technologies.
Insurers are looking for ways to leverage on short to medium-term opportunities while driving forward the industry’s evolution over the long-term.
The story so far
Non-life insurers have experienced high single-digit growth, while life has largely stagnated, growing only 0.4% between 2012 and 2017. That is in line with the global trend of 0.2% growth, but advanced markets have been in decline.
Bancassurers have made a strong play for sales in key markets as people begin to appreciate the benefit of protection products. Economic growth has been the primary driver for the higher growth in non-life, with policy decisions influencing growth across areas such as health, crop, and auto.
Strong fundamentals – high share of working population and strong domestic demand – means that growth in Asia-Pacific economies looks positive.
Increasing levels of wealth and domestic economic growth in emerging markets will also drive economic development.
However, an aging population in the developed markets of Japan, Australia and Korea offers few prospects and domestic demand is already weak.
Emerging market growth has also slowed and is unlikely to reach previous highs, at least while exports remain weak during a period of global trade tensions.
There are five key themes identified that will shape the region’s economic growth — and therefore the insurance industry’s outlook:
- Rising protectionism and potential trade wars;
- Weak equity market performance;
- Weakness in local currencies vs the US dollar;
- Ongoing political uncertainty in some markets;
- Commodity price fluctuations — particularly for crude oil.
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Digital Insurer's CommentsAsia offers huge opportunities for the application of insurtech. Despite strong fundamentals, it won’t all be plain sailing. These are largely emerging economies and they are highly dependent upon the success of large economies, primarily the US and China. The winners will be those who manage these key challenges and maximise their returns from insurtech investment and deployment.
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