Page 37 - Life Insurance Today July - December 2020

IRDAI Annual Report 2019-2020

excerpts

Appraisal of Insurance Market tighter regulations on sales of universal life products.
Elsewhere in emerging Asia, life insurance premium
Appraisal of Global Insurance Market
continued to increase by 4.3 per cent supported by robust
According to the sigma research publication (no.4/2020) on growth in key markets.
world insurance by the Swiss Re Institute, insurance
markets were on a solid growth path before the COVID-19
Global non-life insurance market may witness slow growth
pandemic, with total global direct premium written
in 2020 due to COVID-19 induced recession after a 3.5 per
increased near three per cent in 2019 from the year before,
cent increase in premium to USD 3376 billion in 2019 slightly
supported by the non-life sector in advanced markets, and
above the 10-year average of 3.2 per cent.
life and non-life insurance in China. Total insurance premium
outperformed real GDP growth in more than 60 per cent In advanced markets, non-life premium growth slowed to
of all insurance markets worldwide. Total insurance 2.7 per cent in 2019 from 3.1 per cent in 2018. Asia-Pacific
premium underwritten in 2019 reached USD 6.3 trillion or came out on top with a 4.1 per cent increase, spearheaded
7.2 per cent of global GDP, up from the pre-revision total by Hong Kong with a 7.1 per cent increase in premiums.
of USD 5.4 trillion. Non-life premium in the US and Canada grew by 2.4 per
cent, about one percentage point below the 10-year
Global life insurance market grew by 2.2 per cent in real average, mainly due to weaker growth in US A&H. EMEA
terms in 2019, with premium of USD 2916 billion which was recorded 2.9 per cent growth, nearly two percentage point
a slight deceleration from 2.6 per cent growth recorded in above the historic average, based on improved rates in
2018 driven by a slowdown in advanced markets but was commercial lines in several markets. Premium growth in
still above the annual average of the previous 10 years (1.5 the emerging economies increased to 7.7 per cent in 2019
per cent) from 6.9 per cent in 2018. Emerging Asia continued its
expansion although at a slower pace with increase in
Aggregate advanced market life premium growth slowed premium by 5.8 per cent (12 per cent in China).
to 1.3 per cent in 2019. In advanced EMEA, aggregate
premiums grew by 2.1 per cent. Growth in the Middle East Profitability continues to be under pressure in both the life
and Africa remained weak due to the challenging economic and non-life sectors. In life, persistent low interest rates in
environment in the region. Premiums were flat in advanced advanced markets have pressured life insurers and
Asia Pacific (0.1 per cent), due in part to another decline undermined profitability, especially in Europe. In non-life,
of more than 25 per cent in Australia where there has been underwriting conditions started to improve at the end of
a drop in consumer confidence after allegations of mis- 2017 and through 2018, and rates strengthened in 2019
selling. In the emerging markets, life premium growth and into the first quarter of 2020, particularly in
bounced back to 5.6 per cent in 2019 after falling by two commercial lines. The situation at the onset of the COVID-
per cent in 2018, but was still short of the long-term 19 crisis is in stark contrast to circumstances at the time of
average of 6.5 per cent. The recovery was mainly China- the global financial crisis in 2008-09, when non-life pricing
driven, where premium increased by 6.7 per cent after a was in a softening phase of the cycle. For this reason, it is
contraction of 5.4 per cent in the previous year due to expected that the hit to non-life sector profitability will be

Life Insurance Today July - December 2020 37