Insurance Premiums Rising

July 07, 2017

Insurance Premiums

Total direct insurance premiums written were up by 3.1% in real terms in the last year, even amid moderate global economic growth. Nominal growth of 2.9% – based on US dollar figures – was lower than real growth because of currency depreciations particularly in the UK and some emerging countries.

Swiss Re’s latest sigma report revealed that global insurance premiums showed a “fairly solid” outcome, despite economic growth standing at just 2.5% last year. It cited economic growth as a key driver of insurance demand.

This has held true in the Australian insurance market, with Australian insurance premiums rising by 5 to 10% over the last year, among all major insurance companies including QBE, Allianz, Zurich, NTI, Global Transport, Suncorp, RACQ, NRMA, GIO and Budget Direct.

Global direct life insurance premiums in 2016 increased 2.5% in real terms, amounting to $2.6trn. In non-life, global premiums grew by 3.7%.

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Emerging markets remained the main source of global growth for life insurance premiums, as they were up 17% there, or more than twice the 10-year average of 8.4%. Swiss Re said the rise was primarily driven by rapid growth in China.

"Sales of traditional life products were very strong in 2016, benefitting from further liberalisation of interest rates and government efforts to encourage growth of protection products," explained Swiss Re chief economist Kurt Karl about China’s life sector.

While overall emerging market life premium growth was significantly lower if we don’t include China, there were still notable gains from India, Indonesia, and Vietnam. As for the advanced markets, life premiums contracted by 0.5% in 2016.

In non-life, premium growth in the emerging markets was at 9.6%, above the 10-year average of 8.3%. In China alone, non-life premiums soared by 20%.

Swiss Re said global life premium growth is expected to improve in the coming years, while growth in global non-life is likely to remain moderate. It added that both the life and non-life insurance sectors remain well capitalised despite pressure on profits.

Source: Australian Insurance News

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