Global insurance premiums growth slows: Swiss Re
Global insurance premiums increased by 3.1 percent in real terms in 2016, down from 4.3 percent growth in 2015, according to the latest Swiss Re Institute's sigma report.
The main cause of the weaker global premium development were the advanced economies but growth in many emerging markets – excluding China – slowed also.
Global life premium growth fell to 2.5 percent in 2016 from 4.4 percent in 2015 as advanced market premiums contracted, while life premiums in the emerging regions together grew by more than double the long-term average.
Emerging markets remained the main source of life global growth, with premiums up 17 percent year-on-year, more than twice the 10-year average of 8.4 percent. The fast expansion was primarily driven by China.
"The life sector in China is growing very rapidly," says Kurt Karl, chief economist at Swiss Re.
"Sales of traditional life products were very strong in 2016, benefitting from further liberalisation of interest rates and government efforts to encourage growth of protection products."
Excluding China, overall emerging market life premium growth was significantly lower at 5.7 percent, driven by gains in India, Indonesia and Vietnam. In advanced markets, premiums contracted by 0.5 percent in 2016, extending a 10-year period of stagnation in premium development.
In non-life, global premiums grew by 3.7 percent in 2016, down from the 4.2 percent gain in 2015 but more than the 10-year average of 2.0 percent. Premium growth in the emerging markets was solid at 9.6 percent, above the 10-year average of 8.3 percent. However, the emerging market outcome was heavily skewed by China, where non-life premiums were up 20 percent.
A surge in demand for health insurance and sustained but slowing demand in motor insurance underpinned non-life premiums in China. Excluding China, emerging market premiums overall increased by just 1.7 percent. Non-life premium growth in the advanced markets slowed to 2.3 percent in 2016 (2015: 3.3 percent), but that was well above the 10-year average of 1.0 percent. Growth weakened in all major advanced regions (except Oceania) due to lower economic growth and softer rates.
The emerging markets will likely fuel improvement in life premiums in the coming years, with China and India being the main growth drivers. Non-life premium growth is expected to remain moderate, with stronger economic activity in the advanced markets supporting momentum.
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