MANILA – 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 percent.
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 percent nominal growth in 2018). Insurance penetration (premiums as a percentage of GDP) has thus fallen to 5.4 percent – 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 meager 2.3 percent 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 percent, even Japan grew faster. The upshot: In 2018, the region accounted for only 16 percent of global growth (after a whopping 81 percent in 2017). The global growth engines for 2018 were two old acquaintances: the US (42 percent) and Japan (11 percent).
The culprits for this dismal performance are easy to pinpoint: Life markets both in China and Korea – which account together for 40 percent 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 percent.
Premiums in the Philippines grew by 17.7 percent in 2018, way above the regional average. In fact, 2018 marked the best year since 2013. As usual, life insurance – accounting for more than 70 percent of the premium pool (without health) – set the tone last year: with a growth rate of 20.4 percent, it grew almost twice as fast as property-casualty (+11.1 percent). For this year, Allianz Research expects a slowdown to around 10 percent premium growth, still well above regional or global averages. Notwithstanding bumper growth in the past, the Philippines’ insurance market has still plenty of room to grow: Premiums per capita stood at EUR 51 in 2018 (at par with neighboring Indonesia), penetration at 1.9 percent; it is, for example, already 3.7 percent in China.
Allianz Research expects insurance markets to continue to recover, with global premium growth forecast to reach around 5 percent in the next decade. Growth expectations for Asia (ex Japan) are notable higher – the region should achieve growth of 9.4 percent p.a. over the next decade; in the Philippines, market growth of 12.3 percent is foreseen (13.5 in life and 8.3 in p&c). All in all, around 60 percent of additional premiums will be generated in Asia (ex Japan).
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.
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./PN
