Global insurance premiums grew by 3.8% in real terms in 2015, amidst variations inregional growth rates, Swiss Re’s latest sigma report says. The overall performance was steady after a 3.5%-gain in direct insurance premiums written in 2014, and coming in an environment of just moderate (2.5%) global economic growth, the latter a key driver of insurance demand.
There was a slight slowdown in the life sector in 2015, with global premium growth dipping to 4.0% from 4.3%, due to weaker performance in the advanced markets. On the non-life side, strong growth in the advanced markets of Asia, and improvement in North America and Western Europe, contributed to a 3.6% increase in global premiums, up from 2.4% growth in 2014.
While developments in real terms signal strength, premium volumes in US dollar (USD) at running exchange rates contracted by 4.2% in 2015. This could be seen as a sign of weakness of the insurance sector, but it is only caused by widespread currency depreciation against the USD.1
In the advanced markets, overall life premium real growth slowed to 2.5% in 2015 from 3.8% the previous year. There was a return to positive growth in NorthAmerica after two years of decline. Premium growth was also stronger in advanced Asia2 , driven by Japan and Korea. However, in Western Europe growth slowed significantly to 1.3% from 5.8% in 2014. In the emerging markets, overall life premium growth almost doubled to near 12%, supported by strongperformance in emerging Asia, particularly China.
In non-life insurance, the advanced markets were the main drivers. Advanced Asia (+4.1%) registered the highest growth, and there was a considerable gain inNorth America (+3.2%) also. Growth was more moderate in Western Europe (+1.5%) but this was a significant improvement on previous years of stagnation. Emerging markets continued their robust premium growth trend (+7.8%), primarily driven by China.
In India, total insurance premiums grew strongly by 7.9% in 2015, compared to a contraction of 1.2% in 2014. The improved performance was aided by stronger growth in both life and non-life premiums.
Life premiums growth witnessed a turnaround in India, growing by 7.8% in 2015, compared to a contraction of 2.1% in 2014. The recovery was underpinned by investment-linked products which posted strong growth through bancassurance channels. Non-life premiums growth also picked-up, growing by 8.1%, compared to a growth of 2.2% in 2014. Growth was led by stronger health (including personal accident (PA)) and motor third party liability (MTPL) premiums.
Meanwhile, insurance penetration in India remained low at 3.44% in 2015 compared to the global average of 6.23%, reflecting large untapped potential. Robust economic growth and Government enabling policy actions/initiatives areexpected to increase insurance penetration and will act as a catalyst for future growth of the industry.
Source: Asia Insurance Post
Date: 29th June, 2016