Commercial insurance to see 8.5% CAGR through 2028
Increasing demand for insurance, government regulations and growing competition are anticipated to spur future growth.
The worldwide commercial insurance market is anticipated to see a compound annual growth rate of 8.5% by 2028, reaching a value of more than $1.22 trillion, according to Valuates Reports. The market was valued at $692 billion in 2020.
The gains are expected to be propelled by the increasing need for insurance among businesses, while government regulations that mandate coverage for workers’ comp and liability coverage are also expected to lift the market.
Adoption of advanced technology, such as AI, predictive analytics and machine learning, is anticipated to bring major opportunities for commercial insurers, according to Valuates Reports, which noted a 2018 study found that companies using technologies, such as blockchain and AI, improved their loss ratios by 3%-9%.
Further, insurers leveraging predictive analytics grew their direct written premiums by 53% compared with an 18% market average. Additionally, technology can help companies gain consumer loyalty through advanced services and convenient plans with lower premium costs.
While the market is anticipated to rise, a lack of insurance education among small businesses owners could constrain growth, the research company reported.
This report follows recent news that found professional lines saw a significant rate change during the second quarter, according to MarketScout. Professional line rates stood at 4.3% during Q2, compared with 11% the prior quarter.
Some of the rate hikes seen in Q1 were driven by double-digit increases in some lines, such as D&O, umbrella and professional liability, MarketScout reported.
Looking at the year ahead, S&P Global Ratings anticipates the property & casualty insurance industry’s direct written premiums to increase 5.8%, which would mark the sector’s highest premium growth in 18 years.
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