By: Luke Jones, Published on April 21, 2017 10:12 AM, Last Update on April 21, 2017 07:20 AM
The global insurance market will record slight growth in 2018, according to a new Munich Re report published on Thursday.
The company points out in a press release that an improving economy in the United States and continued growth in emerging market will help to push the industry forward. These factors will offset some negative impacts, such as a slump in the Chinese economy. Asian markets are expected to recover long term and further boost the insurance industry.
Munich Re shows that the international insurance sector will grow 4.5% per year on average in 2017 and 2018. North American will be spurred by primary insurance growth of 1.7% in 2018.
“Premiums in the insurance sector are therefore likely to evolve in line with the global economy, which should show real growth of 2.9% in 2017 and 3.1% in 2018,” the company said. “Projected premium growth will thus be slightly higher than that of 2016, and significantly exceed the average growth rate of almost 2% for the past ten years.”
Michael Menhart, chief economist at Munich Re, noted that “the economies of many emerging markets, such as Brazil, but even Russia, are experiencing a significant recovery. This is leading to increased growth in property-casualty insurance. In most of the industrialized world – in the eurozone, the USA and Japan – demand has been bolstered by a solid economic environment.”
While Menhart projected that life insurance will see “only marginal growth owing to the low-interest-rate environment, by contrast demand in the emerging markets will continue to rise appreciably. Growth prospects for insurers are therefore looking a little brighter worldwide.”
For the property and casualty insurance, premium volume will increase by an average of 2.5% over 2017 and 2018. Emerging markets will shwow the most growth for the P&C industry.
“There are many different reasons for the weaker pace of growth in property-casualty insurance,” the release adds. “The insurance industry is now beginning to respond to mounting pressure in a number of industrialized countries. Companies have been consistently developing their business models; new products, sales channels, and coverage concepts have been cultivated for new risks such as cyberattacks; and IT systems have been modernized. As a result, new business opportunities are gradually opening up in these markets.”