June 24, 2015 by Canadian Underwriter
Total direct premiums written for the global insurance industry in 2014 were up 3.7% to US$4,778 billion after having stagnated the previous year, according to Swiss Re’s latest sigma study.
Released on Wednesday, the study, World Insurance in 2014: back to life, said that the global insurance industry gained momentum in 2014, even though the economic environment improved only marginally. The life sector returned to positive growth, with premiums up 4.3% after a 1.8% decline in 2013, and non-life premium growth accelerated to 2.9% from 2.7%. “A notable feature of the renewed momentum across the insurance industry was a significantly stronger performance in the advanced markets,” Swiss Re added in a statement.
The study noted that non-life premium has been gradually improving since 2009, but still averages less than in the pre-crisis years. In non-life too, the gain in global premiums in 2014 was driven by a substantially stronger performance in the advanced markets. In North America, premiums were up 2.6% from the previous year and in Western Europe premiums returned to positive growth (+0.6%) after years of decline and sluggishness, the study said. [click image below to enlarge]
In the emerging markets, non-life premiums grew by a robust 8% in 2014. The key drivers were solid gains in China, mainly in the motor, credit & guarantee and agricultural lines, and in India where an improvement in business sentiment and economic growth boosted premiums, the release said. In both the advanced and emerging markets, the post-crisis annual average premium growth rate has fallen short of the pre-crisis pace.
In the life sector, there were considerable variations in the premium growth outcomes across different regions. For instance, very strong growth in Oceania, and solid results in Western Europe and Japan more than offset yet another year of contraction in North America. In the emerging markets, life premiums grew by 6.9% compared to 3.6% in 2013. The rise was driven mainly by China, where new distribution channels such as online sales and a recovery in bancassurance boosted premium income. In other emerging regions, however, premium growth generally slowed or even declined. Life premiums in the advanced markets grew by 3.8% in 2014, continuing a volatile pattern of growth and contractions since 2010. [click image below to enlarge]
“Despite the acceleration in 2014, overall advanced-market life insurance premiums are about the same level as before the steep drop in volumes in 2008,” said Kurt Karl, chief economist at Swiss Re, in the release. “The gain in premiums in 2014 outpaced economic growth, increasing insurance penetration in the advanced markets, but premiums post-crisis have been growing at a much slower rate than before the financial crisis.”
The report also noted that underwriting results in non-life were positive but slightly weaker than in 2013, because claims experience deteriorated slightly and contributions from prior-year reserve releases lessened. Both the life and non-life sectors continued to suffer from low interest rates and overall industry profitability remains below pre-crisis levels.
For the non-life industry in advanced markets, the outlook is more moderate, the report noted. Premium rates remain low and although economic growth is improving, it remains sluggish. “Non-life premium growth in the emerging markets, on the other hand, is expected to remain robust.”