ACCORDING to projections by Allianz Research, the global insurance premium volume last year rose to 3,655 billion euros (excluding health insurance). Compared to 2017, the nominal increase adjusted for exchange rate effects is 3.3%.
It was the third year in a row (or the 12th out of the last 15 years) that global premium growth lagged behind the expansion of economic activity (+ 5.7% nominal growth in 2018). Insurance penetration (premiums as a percentage of GDP) has thus fallen to 5.4% the lowest value in the last 30 years.
“It is actually a paradoxical situation,” commented Michael Heise, Chief Economist of Allianz SE. “On the one hand, the risks in the world are constantly increasing just think of climate change, demography, cyber or politics but on the other hand, people worldwide are spending an ever smaller proportion of their income on insurance. A great joint effort by politics and industry is needed to close this ‘protection gap’.”
It was also an unusual year for Asia: Premiums rose by a meager 2.3% in Asia (ex Japan), only the second time since the turn of the millennium that it trailed behind global growth. Moreover, with an increase of 4.0%, even Japan grew faster.
The upshot: In 2018, the region accounted for only 16% of global growth (after a whopping 81% in 2017). The global growth engines for 2018 were two old acquaintances: the US (42%) and Japan (11%).
The culprits for this dismal performance are easy to pinpoint: Life markets both in China and Korea which account together for 40% of the total regional premium pool (ex Japan) shrank in 2018. In China, this was mainly due to a regulatory crackdown on insurance intermediaries selling wealth management products.
2018 does not mark the end of the Asian growth story, commented Michaela Grimm, economist at Allianz Research. On the contrary. The stricter oversight in China is more than welcome, signaling the next phase of a more balanced and sustainable development. Coupled with the breathtaking technological progress in the market it is the clear frontrunner in the application of AI or innovative payment solutions China is the market to watch. Its the best place to learn about the future of our industry. Sold in China is the new gold standard in insurance.
Accordingly, Allianz Research expects this year a rebound in Asia (ex Japan), propelling premium growth of almost 11%.
Premiums in the Philippines grew by 17.7% in 2018, way above the regional average. In fact, 2018 marked the best year since 2013. As usual, life insurance accounting for more than 70% of the premium pool (without health) set the tone last year: with a growth rate of 20.4%, it grew almost twice as fast as property-casualty (+11.1%).
For this year, Allianz Research expects a slowdown to around 10% premium growth, still well above regional or global averages. Notwithstanding bumper growth in the past, the Philippines insurance market has still plenty of room to grow: Premiums per capita stood at EUR 51 in 2018 (at par with neighboring Indonesia), penetration at 1.9%; it is, for example, already 3.7% in China.
Allianz Research expects insurance markets to continue to recover, with global premium growth forecast to reach around 5% in the next decade.
Growth expectations for Asia (ex Japan) are notable higher the region should achieve growth of 9.4% p.a. over the next decade; in the Philippines, market growth of 12.3% is foreseen (13.5 in life and 8.3 in p&c). All in all, around 60% of additional premiums will be generated in Asia (ex Japan).
Insurance premiums in property-casualty and life*
*Compound annual growth rate
Insurance markets by life and property-casualty premiums per capita*
*based on 2018 exchange rates
The interactive Allianz Global Insurance Mapcan be found on our homepage: