Page 15 - Insurance Times April 2019

International

News

China and emerging Asia Emerging markets to drive global economic and insur-

to remain the engines of ance market growth over the next decade, sigma says
insurance growth Emerging markets will remain the growth engine for the global economy and
insurance industry over the next decade, the latest
Insurance demand has a strong posi- sigma report from Swiss Re Institute shows. The
tive rela- study explores how the seven largest emerging mar-
tionship kets will contribute more than 40% of global growth
with eco- in the next decade, with China accounting for over
nomic a quarter of the global output. The report also ex-
growth. amines the factors that will drive insurance premium volume growth in emerg-
The eco- ing markets over the next 10 years. In this period, emerging market premiums
nomic slowdown in emerging mar- are forecast to more than double, outpacing growth in advanced markets by
kets in recent years has not trans- four times. China is set to take over as the largest insurance market in the world
lated into a corresponding drop off by the mid-2030s.
in premium growth, and underlying
"Emerging markets will continue to outperform advanced markets in terms of
consumption momentum for insur-
growth in the next 10 years," says Swiss Re Group Chief Economist Jerome Jean
ance has not been fundamentally
Haegeli. "The shift in economic power from west to east will continue. As this
eroded.
happens, the quality rather than speed of growth becomes the differentiating
This sigma forecasts that the emerg- factor in emerging markets. At the same time, insurance markets will continue
ing market share of global premiums to grow at a strong pace, and China is forecast to become the largest insur-
will increase by about 50% over the ance market by the mid-2030s."
next 10 years, with the long-term
premium growth rate for emerging
markets 5 percentage points higher Battery performance now insurable - Innovative Munich
than that for the advanced markets. Re coverage paves the way for renewable energy
The growth rate in emerging Asia is
Munich Re is the world's first insurer to offer a product that covers battery per-
forecast to be three times the world formance. The product allows manufacturers in the booming battery market to
average over the next two years and offer long-term performance guarantees - whose value is backed by the insur-
China remains on course to be the ance coverage. The new coverage allows battery manufacturers to insure their
biggest insurance market by the customer warranties. For example, if the repair or replacement costs of defec-
mid-2030s. Growth in the Latin
America and Central and Eastern tive or weak battery modules exceed a predetermined amount, the insurance then
Europe insurance markets is also covers the rest. Manufacturers can thus unburden their balance sheets.
projected to accelerate. This will be It will also become easier to obtain project financing, because the maximum
spurred by factors such as growth- costs for any warranties are capped by the insurance cover. This constitutes a
enabling regulation, the adoption of distinguishing feature for investors. The product makes it significantly easier for
technology, ongoing urbanisation, manufacturers to ramp up deployment of battery capacities, thus making re-
and a push for financial inclusion. newable energy more dependable and widely available.

The Insurance Times, April 2019 15