Given that economic expansion generally drives increased demand for insurance products, developing economies have also seen rapid rates of growth in insurance premiums over the last decade. Between 2001 and 2010, total insurance premiums grew by about 11 percent per annum in emerging markets, according to Swiss Re (1). This compares to growth of just over 1 percent in industrialized economies. In addition, twelve of the thirty largest developing economies (in terms of gross domestic product (GDP)) saw total non-life premiums grow more than 100 percent from 2004 to 2008 (2), prompting several large international insurers to increase their presence in these markets.
Reinsurance premiums in emerging markets have also grown significantly. Figure 1 below illustrates the growth of reinsurance premiums across the globe since 2007. While reinsurance premiums remained broadly stable in the established markets of the United States, Canada and Western Europe between 2007 and 2011, strong growth has been recorded in emerging market regions, particularly China, India and other countries in South and East Asia. Of course, as demonstrated by the high losses in non-peak zones in 2011, (re)insurers will need to improve their understanding of the prevailing risks in each developing economy as they grow business in these territories.
1 Swiss Re Sigma Report - Insurance in Emerging Markets: Growth Drivers and Profitability.
2 PricewaterhouseCoopers - The Sprint for the Global Footprint: How Insurers Can Build a Profitable Growth Strategy Through International Expansion, November 2011.