Global insurance premiums could reach US$10 trillion by 2030, as the industry transitions into a new societal role, according to a report by Bain & Company.
The insurance industry is undergoing a transformation in its role, moving from seeking reimbursements for damages to incentivizing behaviours to reduce overall risk, according to the report, titled Insurance 2030: As Risks Mount, Insurers Aim to Augment Protection with Prevention.
Insurers’ risk landscapes are evolving, with risks declining or plateauing in mature areas, such as personal auto and mortality, while expanding in new areas, such as cybercrime and digital assets. Some risks, however, are growing more severe, such as those regarding climate change and infectious disease.
Bain & Company noted that road travel is safer than ever, with death rates of motor vehicle accidents in the US having declined by about 70% over the past four decades. Meanwhile, climate change is expected to cause a roughly ten-fold increase in economic losses over the next three decades. During 2020 alone, the US experienced a record number of wildfires and a record number of storms during hurricane season, yet most losses from such natural catastrophes remain uninsured.
Internationally, risk and protection are also shifting toward countries with faster-growing economies. The study showed that China will drive more than a quarter of global premium growth through 2030. However, few multinational insurers can do business in China, due to its stringent regulations that favour domestic insurers and intense competition in the sector.
“The consequences for an underprotected world with low insurance penetration may be severe, particularly in emerging markets,” said Andrew Schwedel, leader of Bain & Company’s Macro Trends group. “Thanks to improved technology and data, insurance companies now have the chance—and perhaps even the duty – to shift the industry’s central purpose from loss reimbursement to loss control over the next decade.”