Corporate Communications

Phone: 03 2264 0780

Email: joannica.dass@allianz.com.my

  • Contact
  • Social Media

The Article

Insurance markets: Asia romps ahead

 
Insurance markets shift up a gear: Global growth will climb to almost 6 percent over the next ten years 
Recovery is most pronounced in mature markets, growth in emerging markets will not accelerate but remains at a much higher level than in the developed world
Asia is set to keep its crown as the fastest growing region in the world, with many markets seeing double-digit growth
Malaysia’s insurance market will almost double in the next ten years

 

In their latest study, Allianz SE analyzes the growth prospects of global life and p&c insurance markets. After the meager years of the financial and economic crisis, insurers can look ahead with more confidence: While insurance premiums grew worldwide by only 3.1 percent between 2008 and 2016, growth should accelerate to 5.9 percent over the next decade. This recovery mirrors the return of the global economy to normal growth and inflation rates.

The turnaround is most pronounced in mature markets, namely Western Europe. In some emerging markets, on the other hand, growth might even slow down a little, albeit still at a much higher level than in the developed world. The Latin American region and Asia (ex Japan), for example, are likely to continue reporting double-digit growth rates over the next ten years. The Malaysian market is expected to grow by 5.8 percent per year over the next decade.

“The long lean spell of the crisis years is finally behind us”, said Michael Heise, chief economist of Allianz SE. “In particular in Western Europe, many markets look back at a lost decade, in terms of premium income they are today smaller than before the crisis. However, we are not set for fireworks in the future either. In mature markets, insurance premium growth may trail behind economic activity for the time being. On the other hand, most emerging markets will continue to grow at breakneck speed, first and foremost China: Over the next ten years, one in three euros of additional global premiums will be earned in the Middle Kingdom.”

Future growth will reverse a trend seen in the crisis years, the declining weight of insurance in today’s economies. Over the next ten years, global insurance penetration, i.e. total premiums as percentage of GDP, should rise again, from 5.6 percent in 2016 to 5.8 percent in 2027. However, this increase is almost entirely due to emerging markets. However, in this respect, Malaysia behaves rather like a mature market with stable or even slightly declining insurance penetration. 

Furthermore, in the next ten years, the balance between the segments life and p&c will also shift again. Whereas the p&c segment was quite robust during the lean years, growing globally by 3.8 percent per year on average since 2008, the life segment clocked up a rate of only 2.8 percent. Even in Asia, a region clearly dominated by the life segment – which accounted for three quarters of total insurance premiums in 2016 – the p&c segment grew slightly faster. In future, however, demand for life products should revive. Because the need for private savings for retirement is as pressing as ever. As a consequence, life insurance premiums should grow worldwide by 6.5 percent per year until 2027, against average growth of 4.9 percent in the p&c segment. In Asia (ex Japan), too, insurance is expected to again show stronger growth than p&c insurance, and by a wide margin: 12.2 percent against 8.7 percent per year. In Malaysia, the lead of the life segment will be much less pronounced (5.8 percent vs 5.6 percent). This rapid expansion of life markets reflects the huge pent-up demand as well as political support for private provisions in the region.

“Growth in Asian life markets will be extraordinary over the coming years”, commented Michaela Grimm, co-author of the study. “But this does not reflect Asian extravagance but rather sheer necessity, given the demographic development in the region: In 2050, more than half of the global population aged 80 and older will live in Asia. But this rapid aging hits social security systems for old age that are not fully developed yet. So, most people have no choice but to put money aside themselves. The good news is: New technologies such as digitalization can in future be used to allow more people to access and experience insurance cover by launching new products and providing better service. Digitalization can make insurance products for more people more attractive.”

 

Global insurance premiums in life and p&c…

 

 

…in EURbn*

 

 

2007

2016

2027

 Western Europe

991

994

1,356

 North America

996

1,180

1,767

 Japan

297

368

468

 Asia ex JP

306

786

2,550

 Eastern Europe

32

54

117

 Latin America

32

107

332

 Rest of the world

79

118

214

World

2,733

3,606

6,803

 

 

 

 

 

…annual growth rates in percent*

 

 

2008 - 16

2016 - 27

 Western Europe

0.0

2.9

 North America

1.9

3.7

 Japan

2.4

2.2

 Asia ex JP

11.1

11.3

 Eastern Europe

5.8

7.3

 Latin America

14.4

10.8

 Rest of the world

4.6

5.6

 World

3.1

5.9

*based on 2016 FX rates.

You can find the paper on our homepage:
https://www.allianz.com/economic-research/en/ in the Publications section.