The coronavirus crisis will hit insurance premium growth three times harder than the 2008 financial crash did, forecasts by Allianz suggest.
Allianz's latest Global Insurance Report predicts that global premium income will shrink by 3.8% this year, compared with growth of 4.4% in 2019.
The decrease is more than three times larger than the 1% fall in global premium income caused by the last global financial crisis.
Western Europe is expected to be hit even harder, with premiums set to decline by a whopping 4.7%, compared with growth of 4.3% in 2019.
“2020 is lost to the virus, no doubt about it,” said Ludovic Subran, chief economist at Allianz. “More interesting is the question about what comes after COVID-19.”
Life insurance will take a bigger hit than P&C business this year, according to the report, with premium income growth rates of -4.4% and -2.9% forecast respectively.
Despite this, Allianz said that most markets will recover in 2021, and that global growth over the next decade should settle down at 4.4%.
Western Europe is forecast to claw back its pre-COVID-19 premium volume in 2022, but until 2030, it will only record growth of 2.2%, with the region’s global market share set to fall by 6% to 21%.
Subran said that three trends will gather steam in the coming years: Digitalisation of the business model, a pivot to Asia, and the growing significance of environmental, social and corporate governance (ESG) factors.
“While Asian players lead in technology, European peers are ahead with ESG,” he continued. “But dominance of the global insurance industry will be decided in Asia – Asian households emerge as the consumer of last resort, driving global insurance demand.”
Author: Chris Seekings
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