Life insurance premiums in emerging markets, including those in Asia, will grow by 7.2% in real terms in 2024, with just 1.5% aggregate growth in advanced markets, says Swiss Re Institute (SRI).
In its report titled “World insurance: Strengthening global resilience with a new lease of life”, SRI estimates 4.9% premium growth in non-life insurance in emerging markets and a 3.1% gain in advanced economies.
This is partly due to base effects, with premium volumes in emerging markets lower than in the advanced economies from the outset.
The report reads, “It’s also a story of catch-up, reflecting stronger rates of economic growth in emerging markets than in the advanced and, due to structurally higher growth rates, a growing “consumer class” in emerging markets.
For instance, in 2024, it is estimated that Asia alone will contribute 91m people to the global consumer class (defined as those spending at least $12 per day in purchasing power parity terms) with 81% coming from China and India. Eleven other markets – Bangladesh, Brazil, Egypt, Indonesia, Nigeria, Pakistan, Thailand, Turkiye, and Vietnam – will each add 1m more new consumers to the global shopping population.
With growing wealth and spending power, the expanding consumer class in emerging markets can afford more insurance cover, leading to an increase in levels of insurance penetration (premiums as a percent of GDP). SRI’s S-curve analysis indicates that markets including Brazil, China, Colombia, India, Malaysia, Peru, Thailand, and South Africa are at that stage of economic development when notable progress on this front can be expected.
Insurance penetration in emerging markets has increased steadily from 2.2% in 2003 to 3.3% in 2023 but remains well below the advanced market average (around 9.5% last year). The rise can in part be explained by the favourable stage of economic development that key emerging markets have been and continue to be in.
The following table shows total premium volume in US$ in 2023 by region:
|
Region
|
Premium volume
$ m
|
Changes (%) in 2023 Inflation-adjusted
|
Market
share 2023 (%)
|
|
2023
|
2022
|
|
2023
|
2022
|
|
Emerging Asia
|
942, 661
|
910,591
|
7.1
|
2.8
|
13.1
|
|
Advanced Asia Pacific
|
818,955
|
830,199
|
-0.8
|
-0.1
|
11.4
|
|
Middle East & Africa
|
105,980
|
105,949
|
3.3
|
21.4
|
1.5
|
|
Advanced EMEA
|
1,624,932
|
1,514,346
|
-0.1
|
-7.8
|
22.6
|
|
Emerging Europe & Central Asia
|
101,725
|
88,529
|
10.3
|
-2.5
|
1.4
|
|
US and Canada
|
3,397,205
|
3,153,784
|
3.7
|
1.1
|
47.3
|
|
Latin America and Caribbean
|
194,717
|
169,356
|
3.9
|
3.8
|
2.7
|
|
World
|
7,186,174
|
6,772,753
|
2.8
|
-0.8
|
100.0
|
|
Source: Swiss Re Institute - “World insurance: Strengthening global resilience with a new lease of life” sigma report
|