Growth in general insurance premiums may slow from 11% last year to just 3%, says Swiss Re

Swiss Re has warned that the growth of the insurance sector in emerging markets will slow in the wake of the global economic downturn.

The general insurance market grew in real terms by more than 11% last year in emerging market economies such as China, the Middle East and Latin America, the reinsurance giant said. This was the largest annual growth since 2004.

But the financial crisis could slash growth to just 3%, said Swiss Re.

Emerging market premiums in the non-life sector grew 11.6% to $199bn (£136bn) last year.

South and east Asia, eastern Europe and the Middle East grew the fastest, according to Insurance in Emerging Markets, a study published by the reinsurer last week.

Swiss Re predicted that growth in the general insurance sector could fall to 3%-8% between 2008 and 2013.

Emerging markets that relied heavily on external financing and exports could slow significantly, with a corresponding impact on non-life insurance spend. Inflationary pressures could also hit demand for insurance products.

International insurers might also postpone their expansion into emerging markets owing to liquidity restraints caused by the credit crunch.

Daniel Staib, one of the study’s co-authors, said: “The non-life sector benefited from the strong economic environment and the introduction of new compulsory lines in the Middle East.

“Insurance in the emerging markets is expected to grow at a slower pace in 2008 and 2009, but its long-term growth prospects remain positive.”

Motor and property insurance continued to dominate the emerging market landscape last year, with motor outperforming the non-life market as a whole, the study found. Motor insurance tends to be the first to benefit during an economic expansion.

Per capita spending on insurance in emerging economies rose from $28.30 in 2006 to $34.90 in 2007, an increase of 23%. Spending was highest

in eastern Europe and lowest in Africa and south and east Asia. Per capita spending on general insurance in industrialised markets was $1,434.10 last year.

UK brokers and insurers have targeted emerging markets in recent years, particularly China. Aon, HSBC, JLT, Cooper Gay, Willis and Guy Carpenter are already trading. Lloyd’s entered the Chinese market last April.