The global insurance industry grew steadily in 2015 but outlook is mixed, according to a Swiss Re sigma report.
Founded in Zurich in 1863, the Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer, and is present in around 70 offices globally.
According to the report, global insurance premiums grew by 3.8% in real terms in 2015, amidst variations in regional growth rates. This in an environment of just moderate (2.5%) global economic growth, the latter a key driver of insurance demand.
Interest rates in the advanced economies remained very low in 2015, putting pressure on profitability in the life and, to a lesser extent, non-life sectors. "Interest rates and the macroeconomic and financial market environments will continue to shape the outlook for the insurance industry," says Kurt Karl, Chief Economist at Swiss Re. "With profitability under pressure, life insurers will continue to focus on improving capital management, lowering expenses and enhancing investment yields. Profitability in non-life will also remain subdued on still-low investment returns and soft pricing conditions."
Nevertheless, the insurance industry overall remains well capitalised, meaning that insurers are better able to withstand periods of economic or market turmoil.
Here are the findings relevant to India:
Total insurance premiums in India grew by 7.9% in 2015. This was certainly much better compared to the previous year which had a contraction of 1.2%. The improved performance was aided by stronger growth in both life and non-life premiums.
Life premiums growth witnessed a turnaround in India, growing by 7.8% in 2015, compared to a contraction of 2.1% in 2014. The recovery was underpinned by investment-linked products which posted strong growth through bancassurance channels.
- Non-life insurance premiums
Non-life premiums growth also picked-up, growing by 8.1%, compared to a growth of 2.2% in 2014. Growth was led by stronger health premiums, including personal accident and motor third party liability premiums.
Meanwhile, insurance penetration in India remained low at 3.44% in 2015 compared to the global average of 6.23%, reflecting large untapped potential.
Robust economic growth and government enabling policy actions/initiatives are expected to increase insurance penetration and will act as a catalyst for future growth of the industry.
