Munich Re predicts strong insurance growth to 2020
Written by staff reporter
According to a study by Munich Re, the global insurance market is set to grow strongly in the coming years. Munich Re’s Insurance Market Outlook 2013 arrives at the conclusion that growth rates will be especially strong in emerging countries. Growth in the reinsurance market will be slower than that in the primary insurance industry.
“The global economic recovery is also benefiting the insurance industry. We expect the economies of key industrialised countries to improve in the second half of 2013 and in 2014. Consequently, this will lend impetus to demand for insurance”, said Michael Menhart, Munich Re’s chief economist.
According to Munich Re’s estimates, until 2020 the property-casualty insurance market as a whole will grow by approximately 50% compared with 2012 to €1.85tn, and the life insurance market by almost two-thirds to €3.1tn. Growth in insurance and reinsurance in emerging countries will be significantly stronger than in industrialised countries.
Nevertheless, the mature markets in North America, western Europe and the industrialised countries of the Asia/Pacific region remain the dominating growth force. In terms of total primary insurance premiums, their share will fall back to about 73% by 2020 – around ten percentage points lower than in 2012. The share generated by the emerging countries in Asia will move up from 8% to 16%.
“Approximately half of all the additional premium earned between 2013 and 2020 will come from the USA, China and Japan. In this respect, saturated markets and emerging markets both represent great potential for growth in insurance and reinsurance alike”, said Menhart.
Highlights of this year’s Insurance Market Outlook include:
•Premium growth forecast for the global primary insurance market: just under 3% in 2013, just over 3.5% in 2014. In 2012, the market grew by around 1%. The chief reason for the expected growth is the predicted revival of life insurance business.
•In reinsurance, growth was high in 2012 at 3.3%, due partly to rate increases following severe natural catastrophes in the previous years. Growth of some 1% is likely in 2013 and around 2.3% in 2014, and is predicted to be greater in life reinsurance than in property-casualty reinsurance.
•Also in the short term, the emerging countries hold the greatest growth potential for the insurance industry. In the property-casualty segment, the strongest growth can be expected in Asia; in life insurance, Latin America is likely to post the highest growth rates in 2013/2014. Europe trails behind all the other regions in terms of growth in both classes of business.
Nikolaus von Bomhard, Munich Re’s CEO commented: “Munich Re systematically taps into segments with potential for profitable growth. For example, in reinsurance, business transacted in Asia/Pacific and in South America now contributes almost a quarter of our premium volume. At the same time, we are expanding strongly in the areas of know-how-driven innovative coverage concepts for new technologies and comparably challenging complex risks. Our economists’ analysis clearly illustrates the direction of our strategy of combining primary insurance and reinsurance under one roof.”