Global insurance review 2015, and outlook in 2016/17

A moderately stronger global economy should support demand for insurance in all regions next year

Non-life insurance premium growth slowed in 2015, in both the advanced and emerging markets. In the advanced countries, premium growth declined to 1.7% from 2.0%, after inflation, with a slowdown in Western European markets in spite of moderate rate increases in Germany, France and the UK. The weaker growth in the emerging markets was due mainly to economic slowdown in Latin America and Central and Eastern Europe (CEE). On the life side, global premiums were up an estimated 3.3% this year, slower than a 4.7% gain in 2014.

The global economy is expected to strengthen moderately next year, in the face of three main headwinds: slower growth in China, lower commodity prices and an imminent rate increase by the US Federal Reserve. Nonetheless, the US, the UK, the Euro area and Japan are all expected to see slightly better growth in 2016. Emerging markets will grow by about 5%, an improvement on the current 4% pace.

The improving economic outlook should support demand for non-life cover in all regions. Global primary non-life premiums are forecast to grow by 3.0% in 2016 and 3.2% in 2017, after a 2.5% gain in 2015. The emerging markets will be the main drivers, with a return to premium growth in CEE, and incremental growth improvement in other emerging regions. Growth in advanced markets is expected to slow slightly due to the generally soft prices and the only moderate improvement in economic growth.

The just-modest global economic growth outlook will likely impact primary life insurers also. Additional challenges in the short- to medium-term will be persistently low interest rates, volatility in financial markets and regulatory changes. In the advanced markets, premium income is forecast to rise by about 2.5% in 2016 and 2017, up from about 2% growth this year. Once again, the emerging markets will be the main engine of growth, with premiums forecast to increase by 10.7% in both 2016 and 2017. This will in part be attributable to adoption of more customer-centric business models and improved use of data and technologies.

Read the latest Expertise Publication from Swiss Re Economic Research & Consulting for more detail on the outlook for global economy and insurance markets, and also developments in reinsurance.

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