Global life insurance premiums are set to contract slightly in 2022 with increased demand for health and protection cover, according to Swiss Re.
The prediction features in Swiss Re Institute’s latest World Insurance sigma which estimates global life premiums will contract by 0.2% in real terms in 2022 following last year’s robust recovery from lows created by the pandemic.
In nominal terms, the reinsurer estimates 4.8% growth to US$3.1trn in 2022, with inflationary pressures, economic uncertainty and financial markets proving the primary drivers of subdued premium growth in this year.
Heightened risk awareness due to Covid continues to support demand for life protection and health insurance products, the reinsurer noted.
It added that rising interest rates will support profitability of savings-linked business.
However saving premiums, which make up more than three-quarters of the total life premiums, will likely suffer due to volatility in financial markets and as disposable incomes fall.
It is more bullish for 2023 when the reinsurer predicts global life premium growth will recover to 1.9% in real terms as inflation pressures ease and economic conditions improve.
Growth for life cover globally
Looking back to last year, life premiums in advanced markets grew above trend at 5.4% in 2021 after shrinking by 5.8% in 2020.
Strong premium growth in 2021 was supported by a surge in asset values and labour market recovery that lifted demand for saving-linked business.
Regulatory developments and a tax law change boosted the sale of annuity products in the US, resulting in real premium growth of 2.7% in 2021.
In western Europe, insurers’ continuous effort to shift their business portfolio towards capital-light products supported life premium growth, which were up 10.4% in real terms last year.
France reported the strongest premium growth of 27.3%, mainly driven by growth in unit-linked business and a low base effect from 2020. In advanced Asia-Pacific, market shifts towards protection products under regulatory encouragement supported market growth.
Across emerging markets, life premiums grew by 1.5% in 2021, which was well below the historical trend.
Swiss Re attributed the main reason for subdued income growth in China to undermined consumers’ confidence in their financial position and thus demand for saving policies. Regulatory headwinds and a declining insurance agent workforce further weighed, leading to a 2.6% contraction in life premiums.
Sector performance in other emerging markets was stronger.
Improved economic conditions after the pandemic-induced slump, increased risk awareness due to Covid, and a low level of insurance penetration boosted demand for life insurance.
In emerging Asia, life premiums in India, Malaysia, and Vietnam grew by 8.5%, 5.3% and 18.6%, respectively. On aggregate, premiums in the Emerging Europe and Central Asia region grew by 7.0%, and in Latin America by 3.8%, driven by Brazil and Mexico, with premiums up 2.8% and 5.2%, respectively.
While the report forecasts strong global insurance market growth in 2022 and 2023 with total premium volumes expected to rise above US$7trn in nominal terms for the first time ever by the end of this year, it also showed the UK experienced a 16.7% increase in total premium volumes throughout 2021, making it the fourth largest insurance market globally.