According to Swiss Re Institute’s latest Sigma ‘Global economic and insurance outlook 2020’, global growth will remain solid, with life as well as non-life premiums forecast to grow by around 3% – with possible 9% growth in Asia.
The report says still-positive economic momentum will support the insurance sector, with innovation driving further premium growth and narrowing existing protection gaps.
“The global economy has been performing well, and growth will remain solid,” says Jérôme Jean Haegeli, chief economist at Swiss Re. “However, the best is probably over. Cyclical momentum is positive but we expect real GDP to slow by about 1-2 percentage points in most parts of the world over the next two years.”
Emerging markets will continue to grow, however, particularly in Asia, with aggregate growth expected to strengthen to close to 5% annually for the next two years. Emerging markets are likely to drive insurance growth, with global economic power shifting from west to east. “China and emerging Asia in particular will be the main source of insurance demand in the coming years,” says Haegeli. China’s share of global premiums increased from 0.8% in 2000 to 9.7% in 2017 and this is forecast to expand to 16% by 2028.
The Sigma estimates that the global re/insurance sector has total assets of about US$30 trillion under management – roughly three times the size of China’s economy. This asset base should be fully mobilised as a risk absorber, says the report, which estimates that the global mortality and property protection gap currently stands at US$500bn in premium-equivalent terms.