Swiss Re bullish on 'strong' global insurance comeback; main market to watch is China
The global insurance industry is set to recover "strongly" from the COVID-19 crisis, with premiums expected to grow 3.3 percent in 2021 to a total of $6.9 trillion, according to Swiss Re's latest sigma report, which highlights that the biggest jump will be seen in China, followed by other emerging markets.
The 2021 report forecasts that the strong global economic recovery from COVID-19 pandemic will lead to "historically high" global real gross domestic product (GDP) growth of 5.8 percent in 2021.
Insurance demand will benefit from this growth momentum and the total global premium volumes will surpass $7 trillion for the first time ever by the end of 2022. The report forecasts 3.9 percent insurance premium growth for 2022.
In 2021, key market insurance premium growth is projected at 6.3 percent for China, 1.7 percent for the US, 2.8 percent in Western Europe, and 5.6 percent for emerging markets.
"The economic upswing expected in 2021 and 2022 is on track to materialise, and this is a key factor for insurance premium growth across the globe," said Jerome Haegeli, group chief economist at Swiss Re Institute.
Haegeli noted that the "main market to watch is China, where both economic and premium growth continue at a strong pace."
John Chen, president of Swiss Re China, explained that "the Chinese economic bounce-back will drive the recovery of the world economy and boost the development of the insurance industry in China, which will further improve the societal resilience and enable the high-quality development of both the insurance industry and the Chinese economy."
The report, which examines how factors such as inflation and digitalisation are influencing insurance industry development, suggested that a key opportunity for insurers is the positive development in consumer awareness, which has been cemented by the COVID-19 pandemic. It noted that the global health and protection-type insurance premiums grew by 1.9 percent and 1.7 percent, respectively in 2020, as the pandemic increased awareness of the value of health and protection-type products.
"Consumer awareness is clearly an important growth driver and this has been driven by the pandemic," said Haegeli. "Whether it is private medical insurance or supply chain interruption for businesses, people have become much more aware of what insurance is, and how it can help them to emerge resilient from such a crisis."
Haegeli also highlighted the increasingly important role of the private insurance sector in narrowing protection gaps. "We expect the insurance industry to earn a record $7 trillion in premium by the end of next year. The best preparation for the next economic shock is having economic buffers in place. However, fiscal and monetary buffers are being depleted, which means the private insurance sector is increasingly important," he said.
Chen continued: "The 14th Five-Year Plan and other ambitious goals have outlined great growth opportunities and space for innovation. The carbon neutrality target is another key driver that enables the insurance industry to contribute more to the sustainable development of the economy. Swiss Re will continue to work with our partners and clients to close protection gaps and build societal resilience.”
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