Emerging market premiums expected to swell in next decade: Swiss Re
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Despite economic headwinds, emerging market insurance premiums will more than double in the next 10 years, outpacing growth in advanced markets by four times, Swiss Re Ltd. said Wednesday in a report.
The Swiss Re Institute’s sigma report Emerging Markets: The Silver Lining Amid a Challenging Outlook forecasts that Asia’s growth rate will be three times the world average over the next two years, with China on course to be the largest insurance market by the mid-2030s.
Insurance markets in Latin America, Central and Eastern Europe will also see accelerating growth, spurred by factors such as regulatory developments, the adoption of technology, ongoing urbanization and a push for financial inclusion, the report said.
The emerging market share of premium trails its share of the global economy, presenting upside potential for insurance growth, Swiss Re said.
The seven largest emerging markets are forecast to contribute up to 42% of global economic growth over the next decade, while China alone will account for around 27% of growth, the report said.
"Emerging markets will continue to outperform advanced markets in terms of growth in the next 10 years. The shift in economic power from West to East will continue," said Swiss Re group chief economist Jerome Jean Haegeli in a statement.
Despite cyclical and structural challenges, emerging markets remain an attractive growth proposition relative to advanced markets, the report said.
While emerging markets will see a shift to relatively slower growth, this will be accompanied by more stable economic growth and a shift from quantity to quality, Swiss Re said.
"Prior to the global financial crisis, the five years ahead expected growth differential between emerging and advanced markets was 4.5%. It is now 3.5% and this is still a comfortable growth uptick, especially in light of the lower growth levels in advanced markets," Mr. Haegeli said in the report.
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