World insurance market developments in 5 charts

Still-high inflation means today's interest rate mantra is "higher for longer". High rates have sparked bank sector instabilities this year, and the liquidity measures actioned to prevent contagion have added further uncertainty to the inflation outlook. They could also delay a return to conventional monetary policy. With their sound capital positions, insurers have not been shaken by the disruptions in the financial system and, if anything, we expect the industry to demonstrate resilience over the next two years.

We forecast global growth of 2.3% this year and next in real terms, both lower than market consensus, and down from 3% in 2002. Emerging Asia is expected to be the engine of growth, with the reopening of China’s economy adding impetus.

Real growth rates

We estimate that global insurance premium volumes (non-life and life) will grow by 1.1% in 2023 and by 1.7% in 2024 in real terms (both below the 10-year trend of 2.6%), after a 1.1% decline in 2022.

Real premium growth, 2020‒2024F, total, non-life and life

We estimate that global premium volumes will total USD 7.1 trillion in 2023, a new high. In 2022, the US was the largest market by far, in terms of premium volumes. Next came China, the UK and Japan. 

The world’s 20 largest insurance markets by nominal premium volumes, 2022 vs 2021

The profitability of non-life business is set to improve, with improved investment and slowing inflation (eventually) taking the edge off claims severity. We estimate that non-life sector return on equity (ROE) will rise to 7.8% in 2023 from 3.4% last year, and to 9.3% in 2024. The cost of capital is rising in parallel with stronger investment return, but we expect the profitability gap to narrow.

US P&C reserve developments

The profit outlook for life insurers is positive, based on four key drivers: improved investment returns, normalisation of COVID-19 related claims, a de-risking of pension and annuity premiums, and a stabilisation of earnings volatilities with implementation of the IFRS 7 accounting framework this year. We project 4.3% growth in savings premiums in the emerging markets, with most momentum coming from emerging Asia. We forecast that the share of risk business in the global life insurance sector to stabilise at 23% by 2028, up from 22.3% in 2022. Global risk premiums will grow by an estimated 1.7% in 2023, below the long-term trend (CAGR 2011‒21: 4.2%). Protection business is slowing in western Europe and North America, as pandemic-driven risk awareness gradually fades away.

Global L&H market by risk and savings products