SINGAPORE - Global insurance premiums increased by 3.1 per cent in real terms in 2016, a fairly solid outcome in an environment of moderate global economic growth, Swiss Re Institute's latest sigma report said.
The premium development was, however, weaker compared to 2015 due to the slowdown in growth in many advanced economies and in emerging markets - excluding China.
Global direct life insurance premiums totalled US$2.617 trillion in 2016, up 2.5 per cent in real terms. This was slower than the 4.4 per cent expansion in 2015 but still above the 10-year average of 1.1 per cent growth, sigma report said in a release on Wednesday (July 5).
Emerging markets remained the main source of global growth, with premiums up 17 per cent, more than twice the 10-year average of 8.4 per cent, and primarily driven by rapid growth in China.
"The life sector in China is growing very rapidly," says Kurt Karl, Chief Economist at Swiss Re. "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."
Excluding China, overall emerging market life premium growth was significantly lower but still a hearty 5.7 per cent, driven by gains in India, Indonesia and Vietnam. It was a different story in the advanced markets, where premiums contracted by 0.5 per cent in 2016, extending a 10-year period of stagnation in premium development.
In non-life, global premiums grew by 3.7 per cent in 2016, down from the 4.2 per cent gain in 2015 but more than the 10-year average of 2.0 per cent. Once again, premium growth in the emerging markets was solid at 9.6 per cent, above the 10-year average of 8.3 per cent. However, the emerging market outcome was heavily skewed by China, where non-life premiums were up 20 per cent.
A surge in demand for health insurance and sustained but slowing demand in motor insurance underpinned non-life premiums in China.
Excluding China, emerging market premiums overall increased by just 1.7 per cent.