Allianz Global Insurance Report 2021: Bruised but not broken

• Escaped with a black eye: Global insurance premiums fell by only 2.1% or EUR 80bn in 2020
• Strong recovery: 5.1% growth expected in 2021, led by the US and China
• Golden 20s: Over the next decade, premium growth in all regions should be stronger than in the past crisis decade and exceed 5% globally
• Setting the pace: Asia (ex Japan) weathered the crisis better than other regions, with premium income rising by 2.9% in 2020
• Different trajectories: While the p&c segment held up (+1.5%), the life segment declined by 3.3% in 2020 in Thailand

Munich / Singapore, May 13, 2021

Today Allianz published its latest "Global Insurance Report", which analyzes the development of insurance markets worldwide. According to the report, the insurance industry got off relatively lightly during the Corona crisis: in 2020, global premium income fell by only 2.1%. Property insurance even recorded a small increase of 1.1%, while life business slumped by 4.1%. Overall, however, this decline was significantly steeper than in 2009 (-1.1%) in the aftermath of the financial crisis. Total premium income was thus around EUR 80bn lower than before the crisis, adding up to EUR 3,730bn (life: EUR 2,267bn and p&c: EUR 1,463bn).

Strong growth is expected for the insurance industry in 2021. Overall, premiums should rise by 5.1% globally. Unsurprisingly, the USA (+5.3%) and China (+13.4%) are likely to be the two growth engines. Following the sharp slump in the previous year, the recovery in the life segment (+5.7%) will be somewhat stronger than in the p&c segment (+4.2%). The strong growth should continue in subsequent years, driven by the increased focus on sustainability and the further rise of the emerging markets. Globally, average growth of over 5% over the next ten years appears possible.

"The insurance industry proved resilient during the Corona crisis," said Ludovic Subran, chief economist at Allianz. "However, this was the relatively easier part of the exercise. Because the crisis has massively increased the demands of our stakeholders. This affects not least our clients, who, fully digitized, are having new expectations on customer engagement. For the industry, this means a profound transformation, away from a pure product logic and toward a holistic service approach that focuses not on financial compensation but on the management and prevention of risks. This is the only way the industry can adequately benefit from the increased need for risk protection in the post-Corona world."

Asia (ex Japan) weathered the crisis rather well and recorded an increase in premiums of 2.9% in 2020. Both lines grew more or less in sync, with p&c up by 3.1% and life by 2.9%. Total premium income reached EUR 939bn, of which 70% is earned in the life business. Recovery is expected to be much faster than in the rest of the world, reflecting the strong economic recovery: growth of 10.4% is expected in 2021 (life: 10.7%, p&c 9.7%). Average growth over the next ten years is expected to settle at 8.6% (life: 8.9%, non-life: 7.9%), only slightly below the level of the last decade (9.0%).

"Asia is setting the pace for the global insurance industry. That is all the more true in the post Covid-19 world," said Michaela Grimm, Allianz co-author of the report. "The numbers are simply breathtaking. Over the next decade, the region will contribute 50% of global premium growth; China alone will be responsible for 31%. But the Asian story is not only about growth. The Asian insurance market has become a springboard for new technologies and business models. In terms of platformization and customer experience it is years ahead of its Western counterparts."

In 2020, the Thai insurance market took a dive, contracting by 1.9%. This negatively development is entirely attributable to the life business, which accounts for two thirds of premium income – and declined by 3.3%. Premium in the p&c segment, on the other hand, etched up by 1.5%. A modest rebound of 2.0% is expected in 2021 as premium income in both business lines slowly normalizes. Over the next decade, however, Thailand is expected to achieve average growth of 5.3% per year. This is below the regional average as Thailand belongs to the more mature markets in the region: on average, Thai people spend EUR 287 on insurance – against the regional average of EUR 251 (2020).

The interactive “Allianz Global Insurance Map” can be found on our homepage:

https://www.allianz.com/en/economic_research/research_data/global-insurance-map/