China insurers to lead 50%+ growth in Asia by 2030

Asia’s insurance industry is set to contribute over 50% of global growth over the coming decade, with China leading the way, according to the new Global Insurance Report by Germany-based insurer Allianz that was released on Thursday (July 2).

According to the report, regional insurers will see their combined premiums rise by €1.28 trillion ($1.44 trillion) in global premium growth by 2030, with companies based in China alone comprising €777 billion of this growth.

As a result, regional insurers are set to see a surge in the assets they will need to invest. That surge is likely to raise calls for more domestic bond issuance and more product liberalisation.

The Allianz report stated that the global insurance industry entered 2020 in good shape. Insurers in Asia (ex Japan) recorded the fastest regional premium growth during 2019 at 6.5%, with total premiums reaching €947 billion. Notably, almost half of that sum was written in China alone. 

However, the impact of Covid-19 means that life insurers’ premium income looks set to fall by 1.8% in Asia this year, while it will contract by 3.8% across the world.  

“The impact of the Corona pandemic is going to be three times stronger than that of the global financial crisis, when global premium income decreased by 1%,” said a media release about the report, published on Thursday (July 2).

FEAST AFTER FAMINE

After this famine, however, will come a feast. Allianz predicted life insurance will see growth of 8.1% a year until 2030 – almost twice the growth rate anticipated for the global industry.

“Asia was the region first hit by Covid-19; it will also be the region that recovers first,” said Michaela Grimm, Southeast Asia economist for Allianz and co-author of the report. “Higher risk awareness and pent-up demand for social protection will drive growth in the coming years, with China in the lead: For the next couple of years, we expect double-digit increases in premiums in the [country].”

Grimm predicted that the anticipated expansion of China’s premium pool by €777 billion over the coming decade will be more than “the market size of UK, France, Germany and Italy combined”.

She told AsianInvestor that this is likely to lead the region's insurers to put more money into alternative assets in particular. 

"We assume, based on the trends we observe in European markets, that there will be a trend to more alternative assets, which would also meet the need of further infrastructure investments in Asia," Grimm noted.