A Decisive Decade Ahead: Allianz’s Global Insurance Report 2022
Allianz has just released its 2022 Global Insurance Report, reflecting on the global trends impacting insurance markets worldwide.
Key takeaways:
1. Recovery in 2021: Global insurance premiums increased by 5.1% in 2021
This growth has been driven by strong economic tailwinds, rising risk awareness and record-high savings sustained by recovering markets in a post-pandemic world.
Growth was mainly driver by Western Europe and North America, which accounted for a combined two-thirds of premium increases.
Compared to the past decade, which saw an average premium growth of +3.6% annually, 2021 marked an exceptionally strong year for the insurance industry.
2. The slowing down of Asia: The Asian insurance market only grew +0.9% in 2021, lagging behind the global average
This weak growth is mainly due to China, which experienced a premium decline of -1.7%.
Despite this, China still holds the largest market share in Asia and over the past decade, the region has doubled its market share to 12%.
While Allianz have lowered its long-term growth forecast for China’s insurance market, from 9.2% in the previous decade to 6.9%, the report maintains that growth will still come from Asia in the coming years. This remains unchanged.
3. Slowing down in 2022: Compared to the previous year, only 4.8% growth in global premium income is expected in 2022
While this growth rate may still seem strong, against the background of a global inflation rate of 6.2% this reflects a difficult year for the insurance industry.
The invasion of Ukraine has brought about economic sanctions that will cause significant headwinds to global economic recovery efforts. The global economy now faces negative supply stock, higher commodity prices, as well as disrupted supply chains.
In addition, recently tightened restrictions in China in response to fresh Covid-19 outbreaks are expected to cause further impacts on global logistics.
In this context, global economic growth has been forecasted to slow in 2022-23. After a strong year of +5.9% GDP growth in 2021, GDP growth is now expected to drop to +3.2% in 2022 and +2.8% in 2023.
4. A Brave New World: Rising risks caused by geopolitical shifts will drive +4.8% p.a. global premium growth over the next decade
The invasion of Ukraine as well as the growing rivalry between China and the US, have not only affected trade relations but will also have a longer term effect on the global division of labour.
Whereas Europe has historically depended on Russia as an energy supplier, and the global corporations have relied on China for its millions of wealthy consumers, tensions between West and East will likely force all markets to rethink this current state of play.
However, Allianz’s report maintains that good prospects lie ahead, as rising global uncertainties are precisely the breeding ground for rising risk awareness.
In the wake of the pandemic and the Ukraine work, the high risk perception among households and businesses suggests that the demand for insurance coverage will remain strong.
5. A decisive decade ahead: The insurance industry must adapt to change in order to stay relevant
While the pandemic and the war in Ukraine have served as wake-up calls for better risk management and protection, the insurance market will need to be innovative in order to stay relevant in the years to come.
The Allianz report has flagged global concerns for a worsening climate crisis and the rising tide of cyber-attacks as challenges the insurance industry must adapt to.
It argues that the industry must move beyond pricing and transferring risk, to consider sustainable solutions that also cater for changing outcomes.
The insurance industry is about actively shaping and contributing to society in the long-term.
Insurers can play a role in working with customers to adapt to new global trends and increase the resilience of the infrastructure, facilities or supply chains.
Read the full 2022 Global Insurance Report here.