From 2000-2010, commercial insurance premiums were nearly three times higher in emerging markets compared to advanced ones. According to a new report released by Swiss Re, insurers can expect to see more opportunities for growth in these regions, and economic growth is predicted to slow down in advanced markets.
The report, which is entitled, ‘Insuring Ever-Evolving Commercial Risks’ states that premiums in emerging markets grew by 14 per cent per annum in the decade from 2000-2010. In contrast, advanced markets only grew at a rate of 5.4 per cent per annum during the same period.
In the next 12 months, this trend of slower growth in advanced markets will likely continue. The subdued growth is being blamed on the slow economic recovery in North America and Europe. Insurance companies are now focusing their attention on emerging markets to generate growth, since these economies are growing at a faster rate than their advanced counterparts.
From 2000-2010, emerging markets achieved GDP growth of approximately 12.4 per cent, while advanced economies grew at a rate of 4.9 per cent. Faster economic growth has meant more insurance needs and more opportunities for insurance companies. As these countries change their economies from an agriculture-based model to a manufacturing and service-based one, demand for insurance services also increases.
In China alone, the demand for insurance services has grown at an annual rate of 32 per cent since 2000. This country is now the third-largest insurance market in the world. Demand for marine and transport insurance has increased in this market, as well as export credit and product liability coverage. As spending on infrastructure has grown, more commercial insurance coverage has been needed.
The government has recently made regulatory changes making public liability and employers’ liability insurance mandatory for certain high risk industries. These changes came into effect as of July 1, 2011.
