Article Synopsis :
This most recent “World Insurance” report from the Swiss Re Institute is a comprehensive view of the global insurance business across developed and emerging markets, life and non-life (P&C) sectors.
Chock full of relevant statistics, data points, and related observations, the information is organized and presented as follows:
- The global economy and financial markets in 2016
- Global life and non-life insurance
- Digital distribution: turning up the volume
- Advanced markets
- Emerging markets
- Methodology and data
- Statistical appendix
High-level findings include:
The global economy grew moderately in 2016, with GDP up 2.5%.
Total direct insurance premiums written grew by 3.1% in real terms, down from 4.3% growth in 2015, with the slowdown driven mainly by considerably lower growth in advanced markets. Robust premium growth in China supported emerging markets which were otherwise also in slowdown mode.
Global life premium growth slowed to 2.5%, due mainly to contraction in advanced markets. Premiums in advanced markets contracted by 0.5%, while they grew rapidly in emerging economies, driven by China. Premiums were flat in North America and Western Europe, after positive growth the previous year.
Global non-life premium growth slowed too, also due to weakness in advanced markets. Global non-life premium growth slowed to 3.7% from 4.2% the prior year. Advanced markets were the main reason for the slowdown (2.3% in 2016 v. 3.3% in 2015), with all regions other than Oceania experiencing lower growth.
Industry profitability remains under pressure. But the life and non-life sectors remain well capitalised. Continued low interest rates affected life and non-life insurers’ profitability yet again in 2016. Return on equity (ROE) declined in both sectors. In life, moderate premium growth in many markets also dragged on profitability, while the non-life sector was further impacted by lower underwriting results. Lower reserve releases and higher losses from natural catastrophes were key factors in weaker underwriting results. Both the life and non-life sectors remain well capitalised.
Global life premium growth is expected to improve in the coming years, while non-life growth is expected to remain moderate. While North America is expected to outperform Western Europe, growth will likely be highest in advanced Asia. In the emerging markets, China and India will remain the growth engines for life insurance. Growth in the non-life sector is expected to remain moderate, driven mainly by stronger activity in the advanced economies. Premium growth is expected to improve in North America and advanced Asia, but remain flat in Western Europe and Oceania.
Digital distribution of insurance continues to grow globally, but intermediaries are here to stay. There has been a proliferation of direct digital distribution channels in recent years, in some markets. At the same time, the share of traditionally intermediated insurance business remains dominant globally. The digitalisation of insurance distribution will continue, but the pace of change will vary across markets. Digital channels will ultimately be used throughout the distribution process, from information gathering to purchase completion to after-sales service. But not all insurance transactions will migrate online, and intermediaries will continue playing an important role.
The data provided in the report is the most current available. The report’s appendix contains a table of total premium volumes, share percentages, and growth rates by segment, by country.
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Digital Insurer's CommentsThe SwissRe Institute’s annual “World Insurance” report is as detailed a market analysis as you’ll find anywhere, certainly for free. It’s worth reading, certainly worth hanging onto for handy reference.
The U.S. insurance market, with $1.3 trillion in written premium, is still the largest in the world, followed by Japan ($471 billion) and China ($466 billion). With China growing at a 20.6% clip and a population of about 1.4 billion people, and the U.S. growing at about 3%, it’s possible China becomes the world’s largest insurance market within ten years.
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