Page 17 - Insurance Times September 2021

"Japanese economy declined by 4.6% Climate change disrupts able. This could be disastrous for
in the fiscal year ending March 2021 homeowners, who will have to take on
due to the recurrence of new COVID- US natural hazard & fire the risk themselves and are likely to
19 variants and slow vaccine rollout. insurance market as pre- see the value of their homes plummet.
Restrictions imposed on manufacturing miums no longer cover This is likely to be a problem replicated
and construction activities translated around the world, whether it is areas
into slower growth of general insur- sums paid out at similar risk in Australia or places at
ance lines of business in 2020." The regularity of severe weather and risk of flooding.”
Motor insurance is the largest segment fire events across the US last year led
in the Japanese general insurance in- to the US natural hazard & fire insur- General insurance indus-
dustry with 51.5% of GWP in 2020. It ance market paying out more in claims try in Thailand to reach
is forecasted to grow by 1.4% in 2021 than it received in premiums in 2020.
against the decline of -3.6% in 2020, As wildfires continue to rage in Califor- US$10.6bn in 2025
backed by improved vehicle sales. Ac- nia and the recently published U.N. The general insurance industry in Thai-
cording to the Japan Auto Manufacture Intergovernmental Panel on Climate land, in terms of gross written premi-
Association (JAMA), new vehicle regis- Change (IPCC) report warning of 'code ums, is projected to grow from
trations during January-April 2021 in- red for humanity' with increasingly THB261.4bn (US$8.4bn) in 2020 to
creased by 4.2% as compared to same extreme heatwaves, droughts and THB318bn (US$10.6bn) in 2025, ac-
period in 2020. flooding becoming the norm over the cording to GlobalData, a leading data
next decade the current trend of in- and analytics company.
The segment is expected to grow at a
CAGR of 1.7% during 2020-2025. The creased pay outs is likely to continue GlobalData has revised Thailand’s gen-
at an unsustainable level, says
launch of fully autonomous vehicles GlobalData a leading data and eral insurance forecast in the after-
targeting local and global markets as math of COVID-19 outbreak. As per
analytics company.
well as expansion of electric car mar- the latest data, the general insurance
ket is expected to drive growth of the GlobalData’s recent report, ‘Climate industry’s growth slowed to 3.3% in
motor insurance segment during the Change and its Impact on Insurance 2020 as compared to the 4.6% growth
forecast period. Market – Thematic Research’ reveals registered in 2019 due to the pan-
that the US insurance market received demic. Growth is expected to recover
Property insurance is the second larg-
est segment, accounting for 25.1% of $58bn in fire and natural hazard pre- from 2022 onwards and witness up-
miums in 2020, while it paid out $59bn ward trend, supported by the gradual
general insurance premium in 2020.
in the same year driven by the regu- economic recovery.
The segment is expected to grow at a
larity of severe weather events across
CAGR of 5.1% during 2020-2025. Fre- Pratyusha Mekala, Insurance Analyst
quent natural catastrophic events and the country. This included wildfires in at GlobalData, comments: “Thailand
increasing demand for real estate will California, hurricanes in the South and economy continues to suffer from the
support the growth of property insur- severe thunderstorms in the Midwest repercussions of the COVID-19 pan-
ance in the country. For instance, ac- in 2020. demic, which delayed the recovery of
cording to the General Insurance As- The US is already the biggest natural tourism sector. In addition, weak do-
sociation of Japan, 221,994 insurance hazard & fire insurance market in the mestic activity is expected to impact
claims were filed for damages caused world for both incoming premiums and the general insurance premiums in
by the Fukushima earthquake as of 12 outgoing claims, so the ability of cus- 2021.”
May 2021. tomers to keep up with ever-increas- Motor insurance is the largest general
ing premiums to cover the anticipated
"The Japanese economy is expected to insurance segment accounting for
face challenges in the short-term due escalation in claims over the next de- 56.3% of the general insurance GWP
to the impact of COVID-19 pandemic. cade is questionable. in 2020. Decline in automobile sales
Product innovation in the automobile Ben Carey-Evans, Insurance Analyst at due to lockdown restrictions along
sector and the country's vulnerability GlobalData comments: “The immedi- with economic disruptions negatively
to nat-cat events will drive the growth ate concern for the insurance industry impacted motor insurance growth,
for general insurance industry during (and people living in areas of high risk) which declined from 5.6% in 2019 to
the forecast period." is whether they are becoming uninsur- 1.5% in 2020. T

The Insurance Times, September 2021 17