China and emerging markets will dominate insurance growth: sigma report, Swiss Re Institute

Re/insurers must invest in developing in new and emerging markets if they are to grow amid a changing world order in terms of economic growth, according to the latest sigma report from Swiss Re Institute.

The report reveals the extent to which emerging markets will remain the growth engine for the global economy and insurance industry over the next decade and reveals that China will become the world's largest insurance market by the mid-2030s.

The study explores how the seven largest emerging markets will contribute more than 40 percent of global growth in the next decade, with China accounting for over a quarter of the global output. The report also examines 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 Swiss Re group 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."

Insurance demand has a strong positive relationship with economic growth. The economic slowdown in emerging markets in recent years has not translated into a corresponding drop off in premium growth, and underlying consumption momentum for insurance has not been fundamentally eroded.

This sigma forecasts that the emerging market share of global premiums will increase by about 50 percent over the next 10 years, with the long-term premium growth rate for emerging markets 5 percentage points higher than that for the advanced markets. 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 urbanisation, 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," said Jayne Plunkett, chief executive 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."

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