According to projections by Allianz Research, the global insurance premium volume last year rose to 3,655 billion euros (excluding health insurance). Compared to 2017, the nominal increase adjusted for exchange rate effects is 3.3 percent.
It was the third year in a row (or the 12th out of the last 15 years) that global premium growth lagged behind the expansion of economic activity (+ 5.7% nominal growth in 2018). Insurance penetration (premiums as a percentage of GDP) has thus fallen to 5.4% – the lowest value in the last 30 years.
Premiums in Malaysia grew by 4.6 percent in 2018, slightly above the increase in 2017 (4.2 percent). As usual, life insurance – accounting for more than 70 percent of the premium pool (without health) – set the tone last year: with a growth rate of 6.0 percent, it grew much faster than property-casualty which after the premium decline in 2017 at least returned to positive growth (0.7 percent).
For this year, Allianz Research expects an acceleration to more than 6 percent premium growth overall. Malaysia’s insurance market is one of the most developed in the region: Premiums per capita stood at EUR 402 in 2018 (well above China or Thailand) and penetration at 4.3 percent; it is, for example, 3.7 percent in China.
Allianz Research expects insurance markets to continue to recover, with global premium growth forecast to reach around 5 percent in the next decade. Growth expectations for Asia (ex Japan) are notable higher – the region should achieve growth of 9.4 percent p.a. over the next decade; in Malaysia, market growth of 8.2 percent is foreseen (8.6 percent in life and 7.0 percent in p&c). All in all, around 60 percent of additional premiums will be generated in Asia (excluding Japan).
“It is actually a paradoxical situation,” commented Michael Heise, Chief Economist of Allianz SE. “On the one hand, the risks in the world are constantly increasing – just think of climate change, demography, cyber or politics – but on the other hand, people worldwide are spending an ever smaller proportion of their income on insurance. A great joint effort by politics and industry is needed to close this ‘protection gap’.”
It was also an unusual year for Asia: Premiums rose by a meagre 2.3 percent in Asia (ex Japan), only the second time since the turn of the millennium that it trailed behind global growth. Moreover, with an increase of 4.0 percent, even Japan grew faster. The upshot: In 2018, the region accounted for only 16 percent of global growth (after a whopping 81 percent in 2017). The global growth engines for 2018 were two old acquaintances: the US (42 percent) and Japan (11 percent).
The culprits for this dismal performance are easy to pinpoint: Life markets both in China and Korea – which account together for 40 percent of the total regional premium pool
(excluding Japan) –shrank in 2018. In China, this was mainly due to a regulatory crackdown on insurance intermediaries selling wealth management products.
“2018 does not mark the end of the Asian growth story,” commented Michaela Grimm, economist at Allianz Research. “On the contrary. The stricter oversight in China is more than welcome, signaling the next phase of a more balanced and sustainable development. Coupled with the breathtaking technological progress in the market – it is the clear frontrunner in the application of AI or innovative payment solutions – China is the market to watch. It’s the best place to learn about the future of our industry. ‘Sold in China’ is the new gold standard in insurance.”
Accordingly, Allianz Research expects this year a rebound in Asia (excluding Japan), propelling premium growth of almost 11 percent.
Insurance premiums in property-casualty and life*
|Asia ex JP||851||871||964||+1472||9.4|
|Rest of World||242||253||270||+300||7.4|
*Compound annual growth rate
Insurance markets by life and property-casualty premiums per capita*
|Country||Premiums per capita in Euro|
*based on 2018 exchange rates
The interactive “Allianz Global Insurance Map” can be found at: https://www.allianz.com/en/economic_research/research_data/global-insurance-map/