Worldwide, the value of life insurance and insurance-backed retirement savings premiums was US$2.52 trillion for 2015, finds a new research by Finaccord.
The size of the global market for these products has risen at a nominal compound annual growth rate of 4.3% since 2011, it adds, when premiums were worth US$2.13 trillion. But in real terms, this growth rate was 2.7%, adjusting for inflation.
In a breakdown, the reports says, the global insurance premium market in 2015 was made up of US$2.09 trillion that was attributable to life insurance related to investment and retirement, and US$429.2 billion that was attributable to protection-related life insurance.
“At a respective US$540.5 billion, US$322.3 billion and US$254.6 billion in gross written premiums, respectively, the U.S., Japan and China were the world’s largest markets in 2015”, says David Parry, managing consultant at Finaccord.
“Meanwhile, in nominal terms—and across the 40 major markets analysed in depth by Finaccord—the markets that grew most rapidly between 2011 and 2015 were Russia, Argentina and Vietnam, with compound annual growth rates of 38.1%, 23.4% and 21.9%, respectively,” he adds.
“However, once national inflation has been accounted for, the Philippines usurps Argentina in second place with a rate of 18.2%. Russia and Vietnam are still ranked first and third, respectively, with rates of 29.0% and 15.6%.”
But, overall, the level of protection through insurance remains extremely low in some emerging markets. Says Parry, “Premiums for protection-related life insurance are less than US$5 per capita in India, Indonesia, the Philippines and Vietnam, which shows there’s huge potential in these countries.”
Looking ahead, the report forecasts that the global market for life insurance and insurance-backed retirement savings will increase at slightly faster nominal and real compound annual growth rates between 2015 and 2019. For example, it could reach a value of around US$3.07 trillion by 2019, which converts to US$2.87 trillion when you take forecast inflation rates into account.
“Providing for an aging population is one of the strategic challenges faced by all governments,” and life insurers play a central part in meeting the needs of older consumers and investors, says Parry.