Premiums fell “sharply” in Western Europe, China, and India, while growth resumed in the US, the insurer said, as “the unfolding recession in Europe and the weak economy in the US dampened demand for insurance cover”.
The Swiss Re researchers forecast that non-life premiums would “continue expanding moderately in the advanced markets”, while life insurance premium growth in the emerging markets “will revive”.
Daniel Staib, one of the authors of the study, said non-life premium growth in the advanced markets has been supported by gradual rate increases in personal lines of business, and in regions affected by large natural catastrophes.
“Despite the adverse environment in 2011, non-life insurers’ capital position remained sound, putting the industry in a strong position to grow steadily in the future," he added.
Tighter regulations on bancassurance distribution in China and India, the two largest emerging markets, led to an overall decline in emerging market life premiums of 5.1%. However, other emerging regions such as Latin America and the Middle East showed healthy, continuing growth, even though insurance penetration in the Middle East still remains very low compared with other emerging markets, the Swiss Re study shows.
Regarding profitability, Staib explains: "The profitability of the life insurance industry has stabilized, but remains low. Low interest rates remain the key issue for the life insurance sector, affecting investment returns and eroding the profitability of guarantee products."
Among the report’s key findings:
- Global overall premiums declined 0.8% in real terms in 2011
- While non-life premiums expanded 1.9% on solid economic growth in emerging markets and selective rate increases in some advanced markets, global life insurance premiums fell 2.7% last year
- Capital and solvency remained solid, “despite extraordinarily costly natural catastrophe events and historically low interest rates that lowered insurers’ overall profitability”
- In the advanced markets, premiums dropped 2.3% overall, even though premiums grew in the US and Japan, the two largest markets
The study, entitled World insurance in 2011: non-life ready for take-off, may be downloaded from the Swiss Re website here. Chinese and Japanese versions will be added imminently, Swiss Re said.