A study from Swiss Re suggests life insurance premiums in Asia will rebound in 2013, growing by about 10% in real terms.
The study, Global re/insurance review 2012 and outlook 2013/14, indicates that life insurance growth will increasingly focus on risk protection products such as term life insurance, because regulatory changes and low investment yields will continue to dampen savings product growth. Health protection gaps that exist in many key emerging Asian markets, including India and China, will further drive consumers toward risk protection products.
Global life insurance premium growth was close to zero in 2012. Swiss Re says that, globally, life insurance premiums will recover to 3.2% in 2013 globally and to 3.9% in 2014, led by Asia. Swiss Re says emerging Asia, in particular, will experience stronger premium growth in 2013, as India and China are more fully adjusted to regulations passed in 2010/11. Advanced Asian markets will continue to maintain steady positive growth on generally stronger economic activity. But profitability will remain constrained, due to investment yields declining as bonds mature and are replaced with lower-yielding assets.
The global economy is currently fairly weak, but an improving housing market in the U.S., fiscal and monetary stimulus in China and a slow turnaround in the euro area are expected to boost growth in 2013. Monetary policies will remain accommodative in major economies well into 2015, but low interest rates will reduce insurers’ investment returns. Inflation will stay tame in advanced markets, but the risk of inflationary pressures re-escalating in emerging markets warrants close monitoring.
“In China, recent economic indicators are pointing to an improving outlook in 2013. Exports and industrial productions rebound amidst a more constructive global backdrop. Purchasing Managers Index readings in recent months also suggest continuous expansion of economic activities ahead,” says Clarence Wong, Swiss Re chief economist for Asia.