Asian insurance market: Growth pause in 2018, but return to high growth in sight

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

Singapore clocked the lowest growth since the Great Financial Crisis

Over the next decade,Asia will return to high growth and contribute 60% to global premium growth

SINGAPORE,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%.

The Singaporean insurance market-- clearly dominated by life business which accounts for more than 90% of the premium pool-- went through turbulences due to regulatory changes in the life insurance market: With 3.2%,it clocked the lowest life insurance premium growth since 2009 when the market shrank by 10%. Growth in p&c was even weaker (1.7%); this performance,however,capped at least two consecutive years of declining premium income. For this year,Allianz Research expect another weak year with growth of around 1.4% overall,reflecting in part the difficult economic environment. Nonetheless,with insurance premiums per capita of EUR 4,500 (see table) and insurance penetration of 8.9% (in comparison: China: 3.7%,USA: 6.5%),Singapore continues to belong to the top insurance markets worldwide.

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 Singapore,market growth of around 5% 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

China

412

417

481

+902

11.0

Singapore

25

26

26

+19

5.0

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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