Non-life premiums were up 3.6% in 2015, based on strong growth in advanced markets, but emerging markets' performance was more mixed, Swiss Re has noted.
Global insurance premium growth – life and non-life increased to 3.8% in 2015 from 3.5% in 2014, said the reinsurer’s latest Sigma report.
The non-life increase was driven by strong growth in the advanced markets of Asia (4.1%), and improvement in North America (3.2%) and Western Europe (1.5%), noted Swiss Re.
Emerging markets continued robust premium growth – up by 7.8% – primarily driven by China.
Life premium growth meanwhile slowed to 4% in 2015 from 4.3% in 2014, due to weaker performance in advanced markets, the study said.
Still-low interest rates weigh on profitability across life and non-life, the reinsurer reported, but the insurance industry remains well capitalised.
A global slowdown in trade predicted is likely to impact marine and credit premium growth, said the Sigma study.
While developments in real terms signal strength, premium volumes in US dollar at running exchange rates contracted by 4.2% in 2015, noted Swiss Re.
“This could be seen as a sign of weakness of the insurance sector, but it is only caused by widespread currency depreciation against the USD,” the reinsurer noted.
In non-life, both underwriting and investment results were weaker last year than in 2014.
The underwriting result was hit by lower reserve releases and investment results were hit by the low interest rates, said Swiss Re.
“Interest rates and the macroeconomic and financial market environments will continue to shape the outlook for the insurance industry,” said Kurt Karl, Swiss Re’s chief economist.
“With profitability under pressure, life insurers will continue to focus on improving capital management, lowering expenses and enhancing investment yields. Profitability in non-life will also remain subdued on still-low investment returns and soft pricing conditions,” Karl said.
Swiss Re warned that the global non-life sector growth is expected to weaken due to moderate economic activity and soft pricing, mainly in advanced markets.
“The outlook for the emerging markets is mixed. Non-life premium growth will likely be strong in emerging Asia, mainly supported by China. In certain other regions, however, growth is expected to weaken or even contract,” said Swiss Re.
Solvency in the non-life sector was at a record high of 130% in 2015, with capitalisation expected to remain strong, Swiss Re thought.
However, support from higher unrealised gains due to ultra-low interest rates is expected to disappear, the reinsurer suggested, once rates begin to rise in the US and UK.
The average annual growth rate of global insurance premiums since the financial crisis remains below the pre-crisis rate, the reinsurer noted.
“The trend mirrors slower economic growth, and also a slowdown in growth of global trade volumes,” said Swiss Re.
“Global trade grew about twice as fast as world GDP between the early 1990s and mid-2000s, but has only grown at the same pace as GDP in more recent years,” the study added.