life insurance industry continued to make solid headway in 2007,
Swiss Re’s latest world insurance study reveals. Premium income
grew at an inflation-adjusted 5.4 percent to $2.993 trillion, while
premium growth exceeded the average world increase in GDP of 3.8
percent in 2007 and the world 10-year average real premium growth
rate of just above 4 percent.
Developing markets led
the way, registering an average growth rate of 13.2 percent which
took total premium income to $218.8 billion. The two Asian giants
China and India again turned in impressive results. In China
premium income lifted 30.3 percent (in nominal terms) to $58.67
billion while in India an even stronger gain of 36.3 percent to
$47.13 billion was achieved. Notably, the fastest growing Asian
developing market, Indonesia, recorded a 67.6 percent increase in
premium income to $4.73 billion.
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Developed markets presented a mixed picture in 2007, with overall
premium income reflecting a real 4.7 percent increase to $2.174
trillion. Particularly strong growth was achieved in the UK where
premium income grew 22.5 percent in real terms to $349.74
billion.
Though in sterling terms growth was a more realistic 15.7 percent
it was still sufficient to exceed growth in a number of
fast-growing Central and Eastern European countries. Growth in the
UK was driven by pension and non-pension savings products, noted
Swiss Re.
The US market also put in a fair showing, growing 5.5 percent in
real terms to $578.36 billion. Growth was up from 3.5 percent in
2006 and, noted Swiss Re, was driven primarily by an increased
focus on retirement and estate planning and products with
guarantees.
Among developed markets one of the biggest disappointments was
Japan where premium income declined by 3.6 percent in real terms to
$330.65 billion and followed a 3.5 percent decline in 2006. Swiss
Re attributed the poor performance primarily to non-payment
scandals and, more recently, an economic slowdown.
Summing up the overall outlook for the world life insurance market
Swiss Re said that capital and stock market turmoil are likely to
result in a moderation of premium growth in 2008. Lower demand for
unit-linked products is likely to be the most significant negative
influence.
On a positive note, one of the study’s authors Daniel Staib
concluded: “As the economic environment and capital markets
stabilise, life insurance is projected to resume its strong
performance in the medium term, both in terms of growth and
profitability.”
