Global Insurance Review 2017 and Outlook 2018/19
The improved global economic of 2017 will likely be sustained next year. Real growth in the US and Euro area is forecast to be around 2% in 2018.
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Growth in the UK will be slower as Brexit-related uncertainty hampers business investment. Japan's economy outperformed in 2017, but growth is expected to slow to 0.9% next year. Growth in China is forecast to slow to 6.4% from 6.8% this year.
At the same time, the improved economic outlook is expected to boost demand for insurance. For example, in the non-life insurance sector, global premiums are forecast to grow by least 3% in 2018 and 2019 in real terms, and possibly more, depending on the magnitude of the expected price increases. Global life premiums are forecast to increase by close to 4% annually, after-inflation, over the next two years. As in non-life, the major driver of premium growth will remain the emerging markets, in particular China.
Profitability in the life sector remains challenging due to low interest rates. In this environment, insurers continue to reconfigure their investment portfolios in search of higher returns as demonstrated by an increased appetite for less liquid asset classes. And several life insurers have sought to restructure their insurance portfolios to focus on more attractive and/or less capital intensive business lines. In-force management is also increasingly recognised as an effective tool to improve profitability.
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