By helping companies and individuals manage risk more effectively, the insurance industry is in a strong position to support economic growth, say Joan Lamm-Tennant and Stefano Dominedo.
A robust insurance industry that is dedicated to risk management and risk financing is a necessary component of sustainable economic growth. Yet in terms of growth, the insurance industry is not keeping pace with the economy. In 2012, the industry reported 2.4 percent growth in total real premiums, lagging behind the world gross domestic product (GDP) growth of 3.2 percent. As the insurance industry’s relevance wanes, leaders in the field are considering how to reverse the trend and play a more important role in global economic growth.
While premium growth trailed GDP growth worldwide, industry experts acknowledge differences across counties and regions. Brazil, North Africa and Japan reported growth in real insurance premiums in excess of GDP growth in 2012, but the majority of economies—including North America, the UK, France, Germany, Spain, China and India—reported premium growth that was less than GDP growth.
Additionally, global insurance penetration (premiums as a percent of GDP) is on the decline, dipping to 6.5 percent in 2012 from 6.6 percent a year earlier.
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Guy Carpenter, risk management, ILS, natural catastrophes, property cat