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Munich Re predicts primary P&C insurance growth will ‘ease off’ in North America in 2015


May 20, 2014   by Canadian Underwriter


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Real growth in the worldwide primary property and casualty insurance is expected to pick up this year and in 2015, while Canada is expected to remain the ninth largest market in 2020, Munich Re projected in a report announced Tuesday.

Munich Re released its Insurance Market Outlook 2014, which provides estimates of premium growth by region. Worldwide, Munich Re is predicting primary P&C premiums will increase by 3.0% in 2014 and 3.2% in 2015. Primary P&C premiums grew by 2.8% in 2013, both in North America and worldwide.

“In reinsurance, we are expecting moderate growth averaging 2% (in real terms) up until 2020,” Munich Re stated.

The report includes a bar graph depicting real growth in primary P&C insurance premiums, with actual growth in 2013 and estimates for 2014 and 2015.

In North America, premiums are expected to grow by 2.8% in 2015.

“In the USA, sustained rate increases led to sound premium growth in 2013,” Munich Re stated. “A positive cyclical effect should still be seen in 2014, but will then ease off. Nevertheless, because of the good economic outlook, premium growth should still be relatively strong in 2015 as well. In Canada, growth in P&C premiums in 2014 and 2015 is expected to be slightly below the level of economic growth.”

The highest growth rates are in emerging markets in Asia — with actual growth of 11.7% in 2013 and projected growth of 9.9% and 9.8% in 2014 and 2015 respectively.

The lowest growth is in Western Europe, with a real drop of 1.2% in 2013 and projected growth of 1.0% and 1.2% in 2014 and 2015 respectively.

The report also lists the top 15 primary insurance markets — ranked by premium volume in euros — for 2006, 2013 and Munich Re’s projection for 2020.

The United States is in first place and Canada is in ninth place for each of 2006, 2013 and 2020.

Primary P&C premiums in Canada were €69 billion in 2006, €93 billion in 2013 and are estimated at €121 billion in 2020. In the United States, primary P&C premiums were €866 billion in 2006, €905 billion in 2013 and are projected at €1.21 trillion in 2020. The euro is trading at about $1.49.

In 2013, Canada ranked behind the U.S., Japan, Britain, China, France, Germany, South Korea and Italy. The 2020 rankings are projected to be the same except China will take third place and Britain will be take fourth place.

From this year on, premium growth in China “will probably fall appreciably, due to the structurally smaller growth in (gross domestic product) and increasing saturation in major classes of P&C business,” Munich Re stated. “In India, on the other hand, the weak economy influenced market developments in 2013, with the overall growth in P&C premium reaching only 3% in real terms according to preliminary data.”

Worldwide, reinsurance “should also benefit from the growth momentum of the global economy and the primary insurance sector,” Munich Re stated in the report. “In the P&C segment, however, cyclical pressure on rates and increasing retentions will have a dampening effect on global premium growth in the short term. Last but not least, cover against natural hazards in the emerging countries should have a noticeably positive effect on demand for reinsurance in the medium to long term.”


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