Asian insurance market: Growth pause in 2018, but return to high growth ahead
Global insurance premiums increased 3.3% to 3,655 billion euros in 2018
Growth in Asia disappointed,held down by shrinking life markets in China and Korea
Hong Kong premiums grew by 6.7% in 2018,way above regional average
Over the next decade,Asia will return to high growth and contribute 60% to global premium growth
HONG KONG,May 23,2019 -- According to projections by Allianz Research,the global insurance premium volume last year rose to 3,655 billion euros (excluding health insurance). Compared to 2017,the nominal increase adjusted for exchange rate effects is 3.3%.
It was the third year in a row (or the 12th out of the last 15 years) that global premium growth lagged behind the expansion of economic activity (+ 5.7% nominal growth in 2018). Insurance penetration (premiums as a percentage of GDP) has thus fallen to 5.4%-- the lowest value in the last 30 years.
"It is actually a paradoxical situation," commented Michael Heise,Chief Economist of Allianz SE. "On the one hand,the risks in the world are constantly increasing-- just think of climate change,demography,cyber or politics-- but on the other hand,people worldwide are spending an ever smaller proportion of their income on insurance. A great joint effort by politics and industry is needed to close this 'protection gap'."
It was also an unusual year for Asia: Premiums rose by a meagre 2.3% in Asia (ex Japan),only the second time since the turn of the millennium that it trailed behind global growth. Moreover,with an increase of 4.0%,even Japan grew faster. The upshot: In 2018,the region accounted for only 16% of global growth (after a whopping 81% in 2017). The global growth engines for 2018 were two old acquaintances: the US (42%) and Japan (11%).
The culprits for this dismal performance are easy to pinpoint: Life markets both in China and Korea-- which account together for 40% of the total regional premium pool (ex Japan) -- shrank in 2018. In China,this was mainly due to a regulatory crackdown on insurance intermediaries selling wealth management products.
"2018 does not mark the end of the Asian growth story," commented Michaela Grimm,economist at Allianz Research. "On the contrary. The stricter oversight in China is more than welcome,signaling the next phase of a more balanced and sustainable development. Coupled with the breathtaking technological progress in the market-- it is the clear frontrunner in the application of AI or innovative payment solutions-- China is the market to watch. It's the best place to learn about the future of our industry. 'Sold in China' is the new gold standard in insurance."
Accordingly,Allianz Research expects this year a rebound in Asia (ex Japan),propelling premium growth of almost 11%.
Premiums in Hong Kong grew by 6.7% in 2018,way above the regional average. The market,however,is mainly driven by life business – accounting for almost 95% of the insurance premium pool-- and mainland buyers. Thus,it felt the chill of the Chinese market slowdown: After frenzy,double-digit growth between 2010 and 2016,the market cooled already in 2017 (8.1%) and again in 2018. For this year,Allianz Research expect growth to "normalize" at around 8%.
Also as a result of its status as an "offshore" life insurance market,Hong Kong boasts by far the highest premiums per capita worldwide (see table) and-- together with Taiwan-- the highest insurance penetration of 17.5%; in comparison,penetration in mainland China amounts to 3.7%,in the US to 6.5% and in the UK to 9.2%.
Long-term prospects look a little brighter. Allianz Research expects insurance markets to continue to recover,with global premium growth forecast to reach around 5% in the next decade. Growth expectations for Asia (ex Japan) are notable higher-- the region should achieve growth of 9.4% p.a. over the next decade; in Hong Kong,market growth of 8.2% is foreseen. All in all,around 60% of additional premiums will be generated in Asia (ex Japan).
Insurance premiums in property-casualty and life*
EUR bn
CAGR*
2017
2018
2019e
2019-29e
2019-29 (%)
W Europe
981
1002
1028
+368
2.9
N America
1147
1201
1228
+422
2.8
Japan
316
328
339
+110
2.7
Asia ex JP
851
871
964
+1472
9.4
Mainland China
412
417
481
+902
11.0
Hong Kong
50
53
58
+74
8.2
Rest of World
242
253
270
+300
7.4
World
3537
3655
3829
+2672
5.1
*Compound annual growth rate
Insurance markets by life and property-casualty premiums per capita*
Country/Region
Premiums per capita in Euro
1
Hong Kong
7,180
2
Switzerland
4,957
3
Denmark
4,744
4
Singapore
4,509
5
Taiwan
3,921
6
Ireland
3,609
7
Norway
3,470
8
Sweden
3,450
9
USA
3,412
10
Great Britain
3,289
13
Japan
2,583
36
Mainland China
294
*based on 2018 exchange rates
The interactive "Allianz Global Insurance Map" can be found on our homepage:
https://www.allianz.com/en/economic_research/research_data/global-insurance-map/
ABOUT ALLIANZ ASIA
Asia is one of the core growth regions for Allianz,characterized by a rich diversity of cultures,languages and customs. Allianz has been present in the region since 1910,when it first provided fire and marine insurance in the coastal cities of China. Today,Allianz is active in 14 markets in the region,offering its core businesses of property and casualty insurance,life,protection and health solutions,as well as asset management. With its more than 32,000 staff,Allianz serves the needs of over 18 million customers in the region across multiple distribution channels and digital platforms.
ABOUT ALLIANZ
The Allianz Group is one of the world's leading insurers and asset managers with more than 92 million retail and corporate customers. Allianz customers benefit from a broad range of personal and corporate insurance services,ranging from property,life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world's largest investors,managing around 673 billion euros on behalf of its insurance customers. Furthermore our asset managers PIMCO and Allianz Global Investors manage more than 1.4 trillion euros of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions,we hold the leading position for insurers in the Dow Jones Sustainability Index. In 2018,over 142,000 employees in more than 80 countries achieved total revenues of 131 billion euros and an operating profit of 11.5 billion euros for the group.
These assessments are,as always,subject to the disclaimer provided below.
FORWARD-LOOKING STATEMENTS
The statements contained herein may include prospects,statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results,performance or events may differ materially from those expressed or implied in such forward-looking statements.
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