Emerging markets to drive global economic & insurance growth, Swiss Re says
The study explored how the 7 largest emerging markets will contribute more than 40% of global growth in the next decade.
Emerging markets will remain the growth engine for the global economy and insurance industry over the next decade, according to a new study from the Swiss Re Institute.
The study explored how the seven largest emerging markets will contribute more than 40% of global growth in the next decade, with China accounting for over a quarter of the global output.
Emerging market premiums forecast to double over next 10 years
The report also examined the factors that will drive insurance premium volume growth in emerging markets over the next 10 years. In this period, emerging market premiums are forecast to more than double, outpacing growth in advanced markets by four times. 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 the Swiss Re Group’s chief economist, Jerome Jean Haegeli. “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.”
Lower growth levels in advanced markets
A key finding of the report was that relatively slower growth will be accompanied by more stable economic growth, a shift from quantity to quality. “Prior to the global financial crisis, the five years ahead expected growth differential between emerging and advanced markets was 4.5%. It is now 3.5% and this is still a comfortable growth uptick, especially in light of the lower growth levels in advanced markets,” Haegeli said.
The report determined that the emerging market share of global premiums would increase by about 50% over the next 10 years, with the long-term premium growth rate for emerging markets five percentage points higher than that for the advanced markets.
Emerging Asia growth rate to be 3X world average over next 2 years
The growth rate in emerging Asia is forecast to be three times the world average over the next two years and China remains on course to be the biggest insurance market by the mid-2030s.
Growth in the Latin America and Central and Eastern Europe insurance markets is also projected to accelerate. This will be spurred by factors such as growth-enabling regulation, the adoption of technology, ongoing urbanization and a push for financial inclusion.
“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,” Jayne Plunkett, chief executive officer of Swiss Re Reinsurance Asia said. “To do this, we need to strengthen our work creating sustainable, tech-enabled solutions that address increasingly sophisticated and urbanized emerging consumers.”
Victoria Prussen Spears, Esq., (vspears@alm.com) is associate director of the Insurance Coverage Law Center, editor of the Insurance Coverage Law Report, and senior vice president at Meyerowitz Communications Inc.
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