Swiss Re Institute has forecast that non-life premium growth in emerging Asia in 2020 and 2021 will average 3% each year, well below the historic trend of 8%. The near-term outlook is clouded by the COVID-19 crisis.
Falling car sales and ongoing de-tariffication will continue to hold back growth in motor premiums, the institute says in its “Sigma extra 4/2020 World Insurance: Regional review 2019, and outlook” report released yesterday.
In comparison, personal A&H insurance, which has performed well in recent years, is expected to continue to grow steadily. Reforms in public health systems are being implemented in several countries including India, Indonesia, the Philippines and Vietnam. These will open more opportunities for private health insurance participation. Growth is accelerating from a low base for agriculture, liability and credit insurance.
The emerging Asian insurance markets are: Bangladesh, China, India, Indonesia, Macau, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam.
On the other hand, premium growth in the life market in emerging Asia is expected to remain positive this year, and bounce back strongly after a COVID-19 induced slump, particularly in China. The forecast is that life premiums in emerging Asia will rise on average by 3.4% in both 2020 and 2021.
While premium growth in 2020 will slow, the outlook for the life insurance sector in emerging Asia remains relatively favourable despite the COVID-19 crisis.
Increasing risk awareness and alignment of sales channels to the distribution of protection products will help to support growth.
Profitability, though, will remain challenged by a low interest rate environment, as all regional central banks leverage aggressive monetary policies to support economic growth.
In the near term, regulations will continue to focus on improving consumer protection and strengthening solvency measures. The conversion to economic solvency regimes like RBC may generate more capital demand and trigger market consolidation.