Global premiums could increase by around 3% annually in real terms in 2020 and 2021, despite a slowing world economy.

This is according to research published by Swiss Re, which foresees a limited GDP growth in the US and the euro area next year, of 1.6% and 0.9%, respectively.

The main engine of the global economy should be emerging Asia, with near 6% growth in both India and China.

The firm noted that “insurance is a key contributor to economic resilience, more so when growth slows: when households and businesses have access to financial compensation for loss events, the underlying capacity of an economy to absorb shocks is enhanced.”

Asia should be the main driver of industry growth. China in particular is foreseen as becoming a major actor as non-life premiums are forecast to increase by 9% in 2020.
China should account for 60% of all insurance premiums in Asia over the next 10 years, according to the firm. Expanding risk pools could include non-motor personal, and medical and health covers.

Group chief economist at Swiss Re, Jerome Jean Haegeli said: “The exponential growth of mid-market private medical in China, with premiums up 1500% over the last two years, offers an indication of the size of potential.”

“Resilience levels in other emerging markets could be strengthened significantly by taking learnings from the China experience,” he added.

Profitability would be impacted in the case of a recession, as demand for insurance typically falls with economic slowdown. For instance, the firm suggests that a 50 basis-point drop in the yield curve could widen the estimated existing sector margin gap of 6 to 9% of premiums by 1.2 to 1.5%.

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