A Munich RE report has highlighted that the global insurance sector is expected to grow by 4% over the next two years but it’s also predicted Australia will slip in the growth ranks.
The data published in the ‘Munich RE Economic Research 2016 May’ report said despite an uncertain economic environment, emerging markets were playing “high catch-up” on life insurance.
It said that despite the fact life insurance was increasingly being taken out in emerging countries, industrialised countries would continue to suffer from low interest rates, including Australia.
The report predicted that China (ranked 10th
in 2005) would be the second largest insurance market by 2025, the United States would remain at the top and Australia would slip from 11th
position in 2015, to 13th
over the next two years.
Additionally, the Munich RE report said that property-casualty insurance premiums would increase by about 4% in real terms over the next two years, and life insurance would grow by 4.5%, with higher growth anticipated in developed markets.
It projected that by 2025, more than a quarter of global overall insurance premiums would be paid by emerging countries, mainly from Asia.
, the Insurance Council of Australia
general manager of communications and media relations said as a mature market, the Australian market understandably does not have the potential for growth of many developing countries where the levels of non-insurance and underinsurance are much higher.
“Many of the countries where the take-up of insurance is expected to rise substantially over the next decade are within the Asia-Pacific region, providing investment opportunities for any Australian insurance seeking to expand their overseas presence.”
He said while the Munich RE report predicted growth in Australia’s overall insurance market may be slower than some developing overseas markets in the decade to 2025, it still showed premium volume in Australia rising from $121 billion to $173 billion in that period.
“Australia’s general insurers are seeking ways to expand the local market by removing barriers to the uptake of insurance, such as state and territory insurance taxes,” he said.
“The ICA and its members also continue to encourage further private sector underwriting of government statutory insurance schemes.