Slow growth in emerging markets but continued fall predicted in industrialised countries
General insurance premium income will continue to fall in industrialised countries but grow slowly in emerging markets during 2008, according a Swiss Re study.
The study revealed that global non-life premium growth slowed to 0.7% in real terms, totalling $1,668bn (£846.6bn). But while premium volume retreated in the industrialised countries by 0.3%, it grew by 10.2% in emerging markets.
The UK was the worst hit among industrialised nations, dropping 2.3% to $114bn (£57.8bn).
Daniel Staib, a senior economist who co-authored the study, said: “The driver for flat premiums in nominal terms was declining rates in commercial lines. But you need to take into account that figures are adjusted for inflation.”
The study, World insurance 2007: Emerging markets leading the way, examined the life and non-life insurance markets of 147 countries. China performed the best in non-life with premiums up 20% to $34bn (£17.2bn).
Staib said: “Emerging markets are different, with strong expansion continuing in most regions and were mostly stronger than the long-term average. Drivers for this were a stronger economy and new compulsory lines. China moved up 20% with compulsory motor third-party liability.”
But he said that despite slow growth in global non-life, underwriting results and profitability remained strong thanks to reserve releases from previous years.
He said: “The return on equity has declined somewhat, but it’s still close to 10%. In these markets we observed that pressure on rates remains strong”.
He continued: “Looking ahead we expect growth in emerging markets growth to continue, as the economy is still strong in those cases.
“But we do expect a slow-down in this area due to the slow-down in the industrialised market. We also expect pressure on rates but the overall outlook remains positive.”
He added that another concern was rising inflation, which would have an impact on liability insurance.