Emerging markets will remain the growth engine for the global economy and insurance industry over the next decade, according to the latest sigma report from Swiss Re Institute.
The top seven emerging markets will combine for over 40% of global growth in that time period, with China responsible for over 25% of the global output, the report said, adding that emerging market premiums are predicted to more than double, outpacing growth in advanced markets by four times. Meanwhile, China is set to take over as the largest insurance market in the world by the mid-2030s.
“Emerging markets will continue to outperform advanced markets in terms of growth in the next 10 years,” said Jerome Jean Haegeli, Swiss Re’s group chief economist. “The shift in economic power from west to east will continue. As this happens, the quality rather than speed of growth becomes the differentiating factor in emerging markets. At the same time, insurance markets will continue to grow at a strong pace, and China is forecast to become the largest insurance market by the mid-2030s.”
According to Swiss Re, while insurance demand has a strong positive relationship with economic growth, the economic slowdown in emerging markets, such as China, in recent years has not translated into a corresponding decline in premium growth, and underlying consumption momentum for insurance has not been fundamentally eroded.
As such, over the next 10 years, Swiss Re predicts that the emerging market share of global premiums will increase by about 50% with the long-term premium growth rate for emerging markets five percentage points higher than that for the advanced markets. Also, the growth rate in emerging Asia is expected to be three times the world average over the next two years.
“Insurance has long been a key enabler of economic growth. It is imperative that we continue to support governments, companies, and private citizens to fully unlock growth potential in emerging markets,” said Jayne Plunkett, chief executive officer of Swiss Re Reinsurance Asia. “To do this, we need to strengthen our work creating sustainable, tech-enabled solutions that address increasingly sophisticated and urbanised emerging consumers.”
