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The current product structure of the standalone, fully-guaranteed individual critical illness insurance product was launched in Canada more than 20 years ago. Yet penetration remains low at 3%. Scientific advances and next-generation medical diagnostics could undermine the viability of current CI products due to heightened risk of over-diagnoses and anti-selection. Could changing the current long-term guaranteed model benefit consumers and insurers in Canada alike?
We define the pension gap as the difference between the capital required to replace 65% of the pre-retirement income at the point of retirement, and the capital that is projected to be accumulated under mandatory contribution rates. This Expertise Publication estimates the pension gap in the six largest markets in Latin America - Argentina, Brazil, Chile, Colombia, Mexico and Peru – at USD 2.2 trillion. The paper explores the various options these countries have for closing the pension gap, as well as how the insurance industry can help protect individuals against mortality and longevity risks.
We expect a continuation of strong global economic growth. Overall, macroeconomic risks remain broadly balanced – even after upward revisions to our baseline scenario over recent months. Inflation and sovereign bond yields are expected to increase moderately over the next two years.
The US economy is strong and we do not see the latest equity market turmoil derailing our positive 2018 growth outlook and the Federal Reserve's tightening path. On the pace of growth, the US economy remains above potential with inflation risks rising. The labor market is near full employment and wage growth accelerated in January, a trend which we expect to continue. Overall, we project GDP growth to quicken to 2.5% this year with upside potential. Meanwhile, the US government shutdown seems to be averted with the bill to extend the government funding until March 23 going to the Senate. Looking ahead, the wild card is trade policy. With accelerating GDP growth, we expect inflation to increase this year.
China's 2017 annual GDP growth rebounded by 0.2 percentage point to 6.9%, slightly higher than our expectation of 6.8%. This is the first acceleration in growth since 2010, and is higher than the government's target of 6.5%. The solid performance was mainly driven by strong exports, as well as sanguine domestic consumption and services demand.
New issuance slowed dramatically in the second half of the year with only USD 2.13bn of issuance, the lightest total since 2009. Despite this, full-year issuance still exceeded USD 10.0bn, carried by the record shattering first half of the year with USD 8.4bn issuance.
Japan’s commercial insurance market is the fourth largest in the world with total premiums of USD 38 billion in 2016. Penetration (premiums as a percentage of gross domestic product (GDP)) has been rising in recent years, but is still low relative to other advanced markets. Commercial insurance penetration in Japan was 0.8% of GDP in 2016, compared to 1.6% in the US and 2.4% in the UK. By line of business, motor accounted for close to 42% of commercial insurance premiums in 2016. The next biggest lines were property (17.5% of premiums) and liability (17.2%).
Despite an improvement compared to the cat-impacted period a year ago, the Canadian P&C industry's operating performance for 9M17 remained middling, with the annualized ROE at 6.1%. Although prior year's record loss driven by the Fort McMurray fire was not repeated, and the year-ago underwriting loss of CAD 754 million turned into a gain of CAD 430 million, the rough winter weather in 1Q17, wildfires in BC and a number of hail and thunderstorms over the summer kept the combined ratio near break-even at 99.2%.
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(Swiss Re Institute) Risk Dialogue Magazine
The Risk Dialogue Magazine is a newsletter exploring future risk topics, featuring multimedia articles from the Swiss Re Institute's events and insights from our global network of experts.
Our sigma publication series provides comprehensive information on the international insurance markets and analyses of economic trends and strategic issues in re/insurance and financial services.
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