Swiss Re reported that the implementation of compulsory insurance and changes in taxation and pension systems in emerging markets saw non-life business grow 8.9 percent and life increase by 7.5 percent for a premium total of $372.2 billion, and it expects this trend is to continue in the medium term.

The study found that in most emerging markets, demand for liability insurance was fueled by increasing globalization, regional cooperation, capital inflow and changes in the legal, social and corporate sphere.

According to Swiss Re's "sigma" study, "Insurance In Emerging Markets==Focus On Liability Insurance," regional liability premiums went up from $1.3 billion in 1999 to $2.8 billion in 2003.

The company's analysis noted that starting from a low base, average annual liability growth for the period was 12.9 percent==more than double the total non-life business growth rate.

Swiss Re found that Asia accounted for almost 50 percent of total emerging market liability premiums, followed by Latin America at 25 percent and Eastern Europe with 16 percent.

Trade development in Asia and political integration in Eastern Europe were specific growth drivers, whereas Latin America benefited from foreign capital inflow, Swiss Re said.

According to Swiss Re, economic and technological progress and a changing social landscape open up great potential for well-designed liability protection, and in the medium term, liability insurance in the emerging markets is expected to grow twice as fast as gross domestic product.

The study cautioned, however, that the benefits of progress and of trade integration might be obscured if trends such as escalating litigation costs spill over. Insurers and regulators in the emerging markets should thus take advantage of experience elsewhere and ensure a liability environment that is both sustainable and equitable, Swiss Re advised.