sigma No 3/2018: World insurance in 2017: solid, but mature life markets weigh on growth
05 Jul 2018
After an eventful year, what are the major trends affecting premium growth? Geographically speaking, where is premium growth centered? What lines are most responsible for profitability in the current market environment?
Read and download sigma No 3/2018.
Watch the sigma No 3/2018 video below.
Swiss Re Institute's latest sigma examines the development of life and non-life premiums in the global primary insurance industry over the past year and includes a special anniversary double pager analysing worldwide premium developments since the late 1960s. The study also provides a market outlook and highlights issues such as the impact of low interest rates, increasing competition and regulatory changes on profitability in the industry.
Growth continued at a slower pace
Overall, global insurance premiums increased 1.5% in real terms to nearly USD 5 trillion in 2017, versus 2.2% in 2016. Global life premiums increased 0.5% to roughly USD 2.7 trillion in 2017, while global non-life premiums rose 2.8% to approximately USD 2.2 trillion. Growth in both the life and non-life sectors slowed. Falling life premiums in advanced markets such as the US or Western Europe were the main cause of drag on life premium growth. Slower, but still solid growth in emerging markets led to the slowdown in the non-life sector.
China remains the major source of emerging markets growth
In emerging markets, life and non-life premiums increased 14% and 6.1% respectively in 2017. In the non-life sector, growth in 2017 slowed but still remained robust. The slowdown in emerging markets was largely driven by China, where the speed of expansion fell to a still solid 10%. The insurance markets in emerging countries have outperformed the corresponding economies for decades, given the current low levels of insurance penetration.
China continued to be the main growth engine in emerging markets. The Chinese life market grew by 21% in 2017, well above its ten year average of 14%. China is now the second largest life market globally after the US and accounts for more than half of emerging market life insurance premiums written, or 11% of the world total.
Advanced markets broadly stable
Non-life premium growth in advanced markets remained broadly stable in 2017, at 1.9%. In the US, the non-life industry benefitted from higher rates in motor business, while prices in commercial lines remained under pressure.
Life premiums in advanced markets, which fell 2.7% in 2017, were the primary cause of the drag on global growth. In the North American life market, industry players exited the retirement savings business, including variable annuities. Among advanced Asian markets, expectations of lower mortality rates have delayed life insurance purchases in Japan.
The life sector in advanced markets has yet to recover from the 2008 financial crisis. Well documented factors, such as the depressed economic environment, stagnant wages combined with low interest rates and changing solvency regimes made traditional savings products with interest rate guarantees both unattractive for consumers and life insurers.
The Swiss Re Institute expects global non-life premiums to rise, led by the US, where the economy is strengthening. It also predicts that global life insurance premiums will improve over the next few years, driven by strong growth in China. In the years to come, advanced markets will contribute more than half of the additional premiums in absolute terms.
Analysing 50 years of growth patterns and insurance penetration
For 50 years (see anniversary pages), sigma has been publishing data on the global insurance markets showing the changing growth patterns and developments of insurance penetration. This edition of sigma contains a special anniversary double pager where worldwide premium developments since the late 1960s are analysed in more detail.