Global insurance market to see fastest growth in 18 years

The industry bagged $1.2t in premium income in the past three years.

The world’s insurance industry grew at its fastest pace last year since 2006, with an estimated 7.5% annual increment, Allianz Global reported.

The globe’s entire insurance industry collected EUR6.2t ($6.70t) in consolidated premiums in the life industry alone. Similarly, property & casualty (P&C) accumulated EUR2.2t ($2.38t) and health saw EUR1.4t ($1.51t) in insurance premiums, Allianz Global’s “Global Insurance Report” revealed.

Over the last three years, global premium income surged by EUR1.1t ($1.2) or 21.5%. However, when adjusted for inflation, real premiums only increased by 0.7% since 2020.

In 2023, growth across all insurance segments was more balanced compared to 2022. 

Life insurance premiums increased by 8.4%, driven largely by Asia (excluding Japan) with a 16.2% rise, making it the world's largest life insurance market with a 30.0% global market share, surpassing Western Europe. 

P&C premiums grew by 7.0%, with North America remaining the largest market (54.2% global share). Health insurance premiums rose by 6.6%, with Asia (excluding Japan) maintaining a 15.5% global market share.

Despite the rise of emerging markets, the US increased its global insurance market share from 41.3% to 44.2% over the last decade. Meanwhile, Western Europe (-6.7pp) and Japan (-2.8pp) lost market share, primarily to China, which nearly doubled its global share to 10.6%.

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“Ultimately, mastering the climate crisis is not only a question of politics and money but of individual responsibility,” Ludovic Subran, chief economist of Allianz said in a press release. 

“An uninsurable world would be not only a world that failed to cope with climate change but also a metaphor for a collective ethical failure where each individual dodges their moral obligation to reduce carbon emissions,” Subran added.

Looking ahead, the global insurance market is projected to grow at an annual rate of 5.5% over the next decade, aligning with global GDP growth.  The property & casualty segment is expected to grow by 4.7% annually, health by 7.3%, and life by 5.1%, benefiting from higher interest rates. 

The global premium pool is set to increase by nearly EUR5t ($5.40t).

The life segment, particularly in Asia (excluding Japan), is expected to be the main driver of growth, with the region accounting for half of the absolute premium growth. In the property & casualty segment, whilst Asia (excluding Japan) will grow faster (7.1% annually) than North America (3.8%), North America will dominate in absolute terms.

AI is poised to disrupt the insurance industry profoundly, leveraging data for increased personalisation, affordability, and accessibility of insurance products. This technological advancement is seen as critical for maintaining industry relevance amid increasing state intervention and societal challenges.

“AI is not a magic bullet to solve all problems,” Patricia Pelayo Romero, co-author of the report said in the statement. 

“But it has significant potential to help reduce protection gaps by improving the availability, affordability, and accessibility of insurance thanks to increased personalisation and improved cost-efficiency.” Romero added.

($1.00 = EUR0.93)