The region’s insurance market shows the lowest growth rates in the world in 2021

Despite growing uncertainties related to the Russian-Ukrainian war and COVID-19, insurance growth in Asia is expected to accelerate to 7.2% in 2022 (life: 7.0%, P&C 7.6% ), predicts the German global insurer Allianz in its latest “Global Insurance Report”. “, which analyzes the evolution of insurance markets around the world.

Average growth in Asia over the next 10 years is expected to be 7.3% (life: 7.5%, non-life: 6.8%), slightly below the level of the past decade (7. 5%), says the report released yesterday. .

Globally, premium income is expected to grow about 1pp slower than initially expected as the Russian-Ukrainian war weighs on economic activity and confidence, although inflation supports topline . Overall, Allianz now expects worldwide revenue growth of +4.8% in 2022, with life and P&C growing at nearly the same pace (+4.9% and +4.6% respectively) . This figure should be seen in the context of a global inflation rate of 6.2% this year.

The Russian-Ukrainian war will have far-reaching consequences for the global risk landscape, according to Allianz. As the global division of labor is reorganized, the role of emerging markets is likely to diminish: the era of the emerging global middle class as a reliable engine of growth may be over.

On the other hand, the reconfiguration of international supply chains offers new opportunities because this process, at its core, is nothing but “applied risk management” – the core competency of insurers. It will accelerate the transition from a purely product logic to a more service-oriented economic model.

In the life insurance industry, demographics are expected to be the decisive growth driver. This applies to both advanced and emerging markets: relentless aging and social change combined with rising public debt and often inadequate social security systems make a strong case for the need to increase provisions. individual. This development is expected to benefit from two crisis-related developments in the coming years: heightened risk awareness as a result of the COVID-19 crisis and the end of inflation-triggered zero interest rates, which should make many savings and retirement products more attractive again.

In the general insurance sector, climate change is the main topic in two respects. First, extreme weather events will increase in the coming years, leading to higher claims and premiums. On the other hand, climate mitigation efforts will intensify, first and foremost the decarbonization of the energy supply, even more important today amid the Russian-Ukrainian war and the quest for energy independence that results. This requires major investments from the private and public sectors and creates a high need for risk protection, as new risks will emerge with this radical transformation of the economy.

2021

The Asian insurance market has lagged behind the rest of the world in 2021 in terms of growth rate.

According to the report, Asia (excluding Japan) recorded a small increase of only 0.6% in total turnover (life: 0.3%, P&C: 1.4%). The main reason is the decline in China (-1.7%).

In comparison, global premiums increased by 5.1% in 2021 (life: +4.4%; property: +6.3%), thanks to strong economic tailwinds, growing risk awareness and to record savings supported by booming markets. Total turnover reached 4.2 billion euros [$4.5bn] (life: 2.5 tn EUR and damage: 1.7 tn EUR).

Non-life insurance premiums in Asia grew by +1.7% last year, which was faster than premium growth for life insurance products, but significantly below the global average. Here, the weak performance is mainly due to the negative evolution of China (-1.7%). In addition, Japan, where the volume of premiums virtually stagnated (+0.2%), caused regional average growth to fall. Excluding China and Japan, the Asia zone saw its non-life insurance premiums increase by nearly +8%.

As for the life insurance business, with a growth rate of only +0.9%, the development of the Asian life insurance market was significantly weaker than the world average.

Asia’s share of absolute premium growth in 2021 was 8.2% for life insurance and 4.4% for non-life business.

Insurability and affordability

The insurance industry has good prospects only if it succeeds in maintaining its economic and social relevance, says Allianz. Upcoming disruptions will give rise to new risks, for example risks related to data protection, new green technologies or AI and climate liability.

There will therefore hardly be a lack of demand for protection and prevention. However, the industry is called upon to propose solutions to these risks so that they do not remain uninsurable or are assumed willy-nilly by the State. The question of insurability – and closely related: affordability – is likely to become increasingly urgent in the years to come, especially with regard to natural risks. It requires a level of creativity and collaboration with customers and governments that goes beyond previous efforts.

The industry needs to move beyond pricing and transferring risk to changing outcomes. It must actively reduce risk in the system by impacting underwriting and investment, and thus direct the pivot towards sustainability.

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