Credit Suisse’s ‘Global Insurance review 2017 and Outlook 2018/19′ report found that global insurance premiums are forecast to rise by around 4% annually over the next two years.
Profitability is highlighted in the report as a recurring challenge due to a global low interest rate environment, which is putting pressure on investment returns.
Credit Suisse says that the major driver of life insurance premiums growth will remain the emerging markets at around 10% over the next two years.
In contrast, premiums in the advanced markets are expected to grow by a more modest 1-2%, while growth in developed Asia Pacific is forecast to grow by 2-3% in 2018 and 2019.
“The major driver will remain the emerging markets where stable, robust economic growth; expanding populations; urbanisation; and, a rising middle class underpin the positive outlook,” the report says.
The report estimates that global primary life insurance rose by up to 3% in 2017, up from 2% in 2016.
“The current year’s growth rate is more than double the compound annual growth rate of 1.3% of the previous five years,” the report says.
Emerging markets, in particular China, are credited in the report for most of the recent acceleration.
“Life premiums in advanced markets remain sluggish, down an estimated 0.2% this year, which is at least an improvement from the 2% decline in 2016,” it says.
According to the report, North American growth has been poor in 2017 and has estimated to have declined by 2%, driven mainly by lower premium income in the US.
In western Europe, after adjusting for inflation, life premium income stagnated in 2017.
“Real premiums are estimated to have remained flat in the UK and declined in France. In Germany, premiums fell slightly, due largely to weaker sales of single-premium business,” the report says.
In developed Asia Pacific, life premium income is estimated to have risen modestly in 2017 by 1%, driven by a sharp pick-up in Japan following a decline in 2016.