Global property insurance premiums worth US$360.5 billion in 2014; homeowners’ policies make up 54%: Finaccord

The value of global property insurance premiums in 2014 was US$360.5 billion, with homeowners’ policies making up 54% of the total, according to a survey by Finaccord, a market research, publishing and consulting company specializing in financial services.

The global property insurance market size has risen at a nominal compound annual growth rate of 4.7% since 2010, when premiums were worth US$300 billion (though this growth rate was 2.9% adjusting for inflation), Finaccord said in a statement.

The results of the survey, titled Global Property Insurance: Size, Segmentation and Forecast for the Worldwide Market, were released on Friday. Forty countries were covered, including Australia, Belgium, Canada, China, Denmark, France, the United Kingdom and the United States, among others. Countries apart from the 40 investigated accounted for only 6.6% of global property insurance premiums.

The study said that the worldwide market value broke down between US$195.8 billion (54%) in personal property insurance premiums (household or homeowners’ policies bought by individual consumers) and US$164.6 billion (46%) in commercial property insurance premiums (policies bought by corporate, business, public sector and not-for-profit customers including crop insurance).

“At a respective US$150.1 billion, US$22.6 billion and US$22.2 billion in gross written premiums, the U.S., France and Germany were the world’s largest property insurance markets in 2014,” said David Parry, Managing Consultant at Finaccord, in the statement. “Meanwhile, in nominal terms, and across the 40 major markets analyzed in depth by Finaccord, the markets that grew most rapidly between 2010 and 2014 were those of Argentina, Turkey and the Philippines with compound annual growth rates of 29.6%, 17.8% and 16.3%, respectively.”

Once national inflation rates have been accounted for, Parry continued, the fastest-growing markets were those of the Philippines, Thailand and China with respective real compound annual growth rates of 13.1%, 11.3% and 11.1%.

The study found that the composition of property insurance markets between personal and commercial business varied substantially between different countries. In 2014, household/homeowners’ insurance premiums accounted for the highest proportion of the total market in Australia at 69.1%, while they were lowest in China at just 4.2%.

“At the global level, household insurance policies may be outpacing commercial property cover for several reasons,” Perry suggested. “These include the emergence of increasingly effective distribution channels for marketing household cover to individual consumers, such as bancassurance and online sales, plus soft market conditions for commercial property insurance in many parts of the world.”

Looking ahead, Finaccord’s research indicates that the global property insurance market is likely to increase at slightly slower nominal and real compound annual growth rates between 2014 and 2018 than it did between 2010 and 2014, with the result that it will reach a value of around US$421.2 billion by 2018. This converts to US$393.5 billion when deflated in line with forecast inflation rates.

“We expect household insurance to continue outgrowing commercial property insurance with the result that it will have risen to more than 55% of the global market by 2018 with almost a half of its value in that year due to the U.S. alone,” Parry concluded.