Emerging markets will remain the growth engine for the global economy and insurance industry over the next decade, the latest sigma report from Swiss Re Institute shows. The study explores how the seven largest emerging markets will contribute more than 40% of global growth in the next decade, with China accounting for over a quarter of the global output. The report also examines the factors that will drive insurance premium volume growth in emerging markets over the next 10 years. In this period, emerging market premiums are forecast to more than double, outpacing growth in advanced markets by four times. China is set to take over as the largest insurance market in the world by the mid-2030s.
“Emerging markets will continue to outperform advanced markets in terms of growth in the next 10 years,” says Swiss Re Group Chief Economist Jerome Jean Haegeli. “The shift in economic power from west to east will continue. As this happens, the quality rather than speed of growth becomes the differentiating factor in emerging markets. At the same time, insurance markets will continue to grow at a strong pace, and China is forecast to become the largest insurance market by the mid-2030s.”
Emerging markets currently face cyclical and structural challenges, but they remain an attractive growth proposition relative to the advanced markets. The report examines this optimism, with a key finding that the shift to relatively slower growth will be accompanied by more stable economic growth, a shift from quantity to quality. “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”, Haegeli says.