According to the ‘World Insurance in 2017’ report published by reinsurance major, Swiss Re, the global economy improved considerably in 2017, with real gross domestic product (GDP) rising 3.3%.
The expansion of total direct premiums cooled to 1.5% in real terms in 2017, (2016: 2.2%). Both the non-life and life sectors slowed, but falling life premiums in advanced markets were the main cause of drag on overall global premium growth.
Global life premiums increased only marginally by 0.5% to USD 2657 billion in 2017 (2016: 1.4%).
The slowdown was primarily driven by advanced markets, which declined 2.7% in 2017 (2016: -1.9%) as all the regions experienced negative growth mostly due to low interest rates that continued to adversely affect the supply and demand for savings products. In emerging markets, life premium growth remained strong at 14%, mainly driven by China. In other emerging markets, the expansion was slower at 5.8%. The main cause was the weak performance of Latin America, while other emerging Asia and CEE developed favorably.
Global non-life premium increased to 2.8% to USD 2234 billion in 2017 down from 3.3% in 2016. The slowdown was mainly due to lower growth in emerging markets, while growth in advanced markets was roughly steady.
Profitability continues to be under pressure in both the life and non-life sectors. In the life segment, low interest rates are affecting investment returns, while competition and regulatory changes have increased the pressure on profitability as well. On the other hand, ROE of the non-life sector declined for the third consecutive year as the industry
experienced underwriting losses due to heavy losses from natural catastrophes as well as continuing price pressure.
Global life premium growth is expected to improve over the next few years. Life business will be challenging among advanced markets, but strong in emerging ones. The global non-life sector is expected to improve, supported by advanced markets due to a solid economic environment, especially in the US. In emerging markets, non-life premium growth will remain robust, but slightly lower than in the recent past due to strong growth in emerging Asia and ongoing soft rates.
Indian Insurance in the global scenario
Globally, India’s share in the global insurance market was 2.0 percent during 2017. However, during 2017, the total insurance premium in India increased by 10.1 percent (inflation adjusted) whereas the global total insurance premium increased by 1.5 percent (inflation adjusted).
Globally, the share of life insurance business in total premium was 54.32 percent. However, the share of life insurance business for India was very high at 74.73 percent while the share of non-life insurance business was at 25.27 percent.
In life insurance business, India is ranked 10th among the 88 countries, for which data is published by Swiss Re. India’s share in the global life insurance market was 2.76 percent during 2017. However, during 2017, the life insurance premium in India increased by 8.0 percent (inflation adjusted) when global life insurance premium increased by 0.5 percent.
The Indian non-life insurance sector witnessed a growth of 16.7 percent (inflation adjusted) during 2017. During the same period, the growth in global non-life premium was 2.8 percent. However, the share of Indian non-life insurance premium in global non-life insurance premium was at 1.11 percent and India ranked 15th in global non-life insurance markets.
| Regions/Countries | Life (%) | Non-Life (%) | Total (%) |
|---|
| Advanced markets | -2.7 | 1.9 | -0.6 |
| Emerging markets | 14.0 | 6.1 | 10.3 |
| Asia | 5.6 | 5.8 | 5.7 |
| India | 8.0 | 16.7 | 10.1 |
| World | 0.5 | 2.8 | 1.5 |
Insurance Penetration and Density in India
The measure of insurance penetration and density reflects the level of development of the insurance sector in a country. While insurance penetration is measured as the percentage of insurance premium to GDP, insurance density is calculated as the ratio of premium to population (per capita premium).
During the first decade of insurance sector liberalization, the sector has reported a consistent increase in insurance penetration from 2.71 percent in 2001 to 5.20 percent in 2009. Since then the level of penetration was declining and dropped to a level of 3.30 in 2014. However, it started increasing since 2015 and showing an increasing trend onwards viz. in 2015 (3.44 percent), in 2016 (3.49 percent) and in 2017 (3.69). The level of insurance density reached the maximum of USD 64.4 in the year 2010 from the level of USD 11.5 in 2001. However, from the year 2011 to 2016 it was hovering between 50 to 60 but in the year 2017, it has grown up to USD 73 (USD 59.7 in 2016).
The insurance density of the life insurance sector had gone up from USD 9.1 in 2001 to reach the peak at USD 55.7 in 2010. Since then it has exhibited a declining trend up to the year 2013. During the year 2017, the level of life insurance density was USD 55.00 (USD 46.50 in 2016). The life insurance penetration had gone up from 2.15 percent in 2001 to 4.60 percent in 2009. Since then, it has exhibited a declining trend up to the year 2014. There was a slight increase in 2015 reaching 2.72 percent, remained the same in 2016 and increased to 2.76 in the year 2017.
The penetration of the non-life insurance sector in the country has gone up from 0.56 in 2001 to 0.93 in 2017(0.77 in 2016). Its density has gone up from USD 2.4 in 2001 to USD 18.0 in 2017(13.20 in 2016).
(Source: Swiss Re,Sigma various issues)
| Region/Country | Life (USD Billion) | Non-Life (USD Billion) | Total (USD Billion) |
|---|
| Advanced markets | 2059.48 | 1760.16 | 3819.64 |
| Emerging markets | 597.79 | 474.26 | 1072.05 |
| Asia | 1043.69 | 547.00 | 1590.69 |
| India | 73.24 | 24.76 | 98.00 |
| World | 2657.27 | 2234.42 | 4891.69 |
Source: Swiss Re, Sigma 3/2018 Note: Figures in brackets indicate share of the segment in percent.
