Asia Pacific is forecast to account for 35% of global primary insurance premiums in 2025, up from 30% at present, according to Munich Re’s “Insurance Market Outlook”.
The share of premiums coming from the mature economies in Asia Pacific is predicted to be equal to those from the emerging segments of the region – at 17.5% each. In 2014, contributions from the mature Asia Pacific markets had accounted for 20.3% while emerging markets contributed 10%. China is expected to surpass Japan during the next 10 years in terms of primary insurance premium volume with EUR715 billion (US$815.84 billion), and be second to the US (US$1.31 trillion) by 2025.
As for 2015/2016 outlook, the global insurance industry will grow by an average of just under 4% (in real terms, ie adjusted for inflation: 3%) over the next two years. Munich Re said it continues to see significant catch-up potential in the emerging economies. In the industrialised countries, the outlook in life insurance is marred by the continuing low interest rate environment, whereas property-casualty insurance could benefit from more dynamic economic activity.
“The global economic environment will improve this and next year, even if growth expectations in emerging markets weaken”, commented Mr Michael Menhart, Munich Re’s Chief Economist. “In industrialised countries in particular, competition and the low-interest-rate environment are hitting earnings and profits in the insurance market. Despite a slight weakening, growth prospects for the insurance industry in the emerging markets of Asia, South America and Africa remain good.”
Long term up until 2025, growth in property-casualty primary insurance will remain slightly below that of the economy overall. Premiums in life insurance may grow more strongly than anticipated because there is a high demand for old-age provision in ageing societies, and because increasing prosperity is the driving force behind life insurance business in emerging markets.
In the period up to 2025, 41% of absolute premium growth in property-casualty insurance will come from emerging markets, far more than previously. In life insurance, this figure will be even higher at 44%. In 2025, the largest primary insurance market will still be the US, followed by China, which will oust Japan and the UK to third and fourth places in the ranking of the largest insurance markets.