Emerging markets are the main engines of growth for the re/insurance industry, according to a report released by global auditing firm
EY. The data reveals an average industry growth of 3.7% in the period from 2016 to 2018, led by developing markets.
The global insurance trends analysis 2016 report says that over the last five years, emerging markets’ gross written premiums (GWP) within the global market rose from 15% in 2010 to 18.7% in 2016. These emerging markets are expected to continue growing, while more mature markets will experience muted growth, mostly due to macroeconomic conditions, geopolitical changes, and persistently low interest rates.
“Emerging markets will remain the growth driver for premiums, with forecasts in non-life business expected to improve 6% and an anticipated low double-digit growth in the life business,” said EY analysts in the report.
Growth in emerging Asian markets accelerated in 2016, increasing to 20% from 13% in 2015.
Due to an expanding middle class and increased life expectancy due to rapid economic growth, demand in life and health insurance has seen a surge in China. EY added that several other markets such as India, Indonesia, Malaysia, and Vietnam are also expected to contribute in a similar manner.
On the flip side, EY cautioned that expectations must be tempered as the rapid growth is seen to moderate soon.
“Growth can be expected to moderate in the near term on account of a gradual shift toward protection-based products (which typically have a lower ticket size), reduced demand for investment-linked products and regulatory actions in several markets [including mainland China], to improve sales quality,” it said.
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