MANILA, Philippines - Emerging markets will take the drivers seat as the global premium growth is forecast to move forward in a modest pace, as low interest rates continue to challenge for the entire insurance industry.
Global overall premiums declined 0.8 percent in real terms in 2011.
According to Swiss Reinsurance Co. Ltd. (Swiss Re), life insurance premiums will be revived in the emerging markets. It dropped by 2.7 percent in 2011. Swiss Re is one of the leading global reinsurance companies focused on risk transfer, risk retention financing and asset management.
China and India are expected to contribute significantly as the two largest markets in Asia started consolidating their distribution channels and line of business. Fifty-seven percent of total global premiums come from life premiums.
For the non-life segment, robust growth in the emerging markets and hardening prices are expected to support premium growth. Premiums expanded by 1.9 percent on solid economic growth in emerging markets and selective rate increases in some advanced market.
“However, the turn of the pricing cycle will likely be gradual and limited to certain markets and lines of business. Slower economic growth in the advanced markets will weigh on insurance demand for life and non-life insurance,” Swiss Re said.
Elsewhere in the emerging markets, life premium growth is set to continue to benefit from rising income and increasing risk awareness. Savings products and credit life insurance in particular are expected to make further inroads into Latin America.
However, low interest rates will continue to be a challenge for the entire insurance industry.
“Last year was not a great one for premium growth, but 2012 should be a lot better as rates continue to improve in non-life markets and India and China return to robust growth in life markets,” Kurt Karl, Swiss Re’s chief economist, said.
Based on data released by Swiss Re, total economic losses to society due to disasters reached an estimated $370 billion last year, compared to $226 billion in 2010.
Insured losses from natural catastrophes came to around $110 billion, while man-made disasters cost the sector around $6 billion, making 2011 the second highest catastrophe loss year ever for the insurance industry.
“The gap between economic and insured losses of $260 billion points to the still widespread lack of insurance protection worldwide,” the report pointed out.