Emerging markets set to drive future insurance sector growth

11 October 2016

  • Despite recent slowdowns, emerging economies are expected to outperform advanced markets over the next five years.
  • The seven emerging markets in JLT Re’s study are set to see significant non-life premium growth through to 2021.
  • They are also expected to gain an increasing share of the global non-life insurance market during this time as insurance penetration and insurance density levels rise.

JLT Re has today launched a new Viewpoint Report ‘Emerging Markets: Moving Ahead’. The paper examines the significant opportunities on offer for the (re)insurance industry in emerging markets over the next five years, with a specific focus on seven key countries: namely China, India, Thailand, Brazil, Mexico, Kenya and South Africa.

David Flandro, Global Head of Analytics, JLT Re, said: “Whilst it is true that some emerging markets have suffered downturns since 2014, projected economic forecasts over the next five years remain encouraging. Overall, emerging market economies are expected to expand by more than 4% in 2016, which would represent the first acceleration in growth since 2010. Of course, not every emerging economy will flourish, but emerging markets, in aggregate, are expected to grow at between two and three times the pace of developed markets through to 2021.”

Actual and Projected GDP Growth for Emerging Markets Vs Advanced Economies

Actual and Projected GDP Growth for Emerging Markets Vs Advanced Economies

Source: JLT Re, IMF

David Flandro continues, “Figure 1 compares recent and forecasted GDP growth rates for the seven emerging markets in our study with projections for advanced economies. India, Kenya and China are the standout future performers, with GDP expected to grow at three to four times the rate of developed countries over the next five years. This translates into significant opportunities for risk transfer as prospects for (re)insurers in emerging markets are closely tied to the future development of their respective economies.”

Stuart Beatty, CEO, JLT Re Asia Pacific said, “Figure 2 shows that these seven emerging markets are set to see significant non-life premium growth over the next five years and mostly outpace more subdued expansions in certain advanced countries. Perhaps even more crucially, they are also expected to gain an increasing share of the global non-life insurance market as insurance penetration and insurance density levels rise. Indeed, the catch-up potential associated with insurance penetration and density rates in emerging markets reinforces our view that these countries will be crucial in driving long-term insurance sector growth as carriers seek new and profitable revenue streams.”

 Forecasted Non-Life GWP Growth Vs Projected GDP Growth – 2015 to 2021

Forecasted Non-Life GWP Growth Vs Projected GDP Growth – 2015 to 2021

Source: JLT Re, Lloyd’s Market Intelligence – Compare Countries, IMF

Stuart Beatty concludes, “Positive fundamentals such as expanding middle classes in urban areas, increased asset ownership, infrastructure investments and industrialisation will drive this expansion. At JLT Re, we see this ‘new world order’ as a huge opportunity. Of course, a thoughtful approach is needed when expanding or entering into new territories and there are inevitably new risks which need to be managed. But as insurance development continues in these countries, and demand for reinsurance increases, JLT Re is committed to supporting clients in fulfilling the important societal role of delivering innovative and relevant risk transfer products to promote economic advancement.”

- ENDS –

Enquiries and for a copy of the report

JLT Re

Isabella Gaster, Head of Marketing Communications | T: (+44) 7920 586 032 |E: Isabella.Gaster@JLTRe.com

Notes to editors

Viewpoint Reports

JLT Re Viewpoint is JLT Re’s regular series of reports that comment on or give insight into key topics, occurrences or changes in the (re)insurance and broking market place.

About JLT Re

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Deep specialist knowledge and extensive experience of both the reinsurance market and clients’ own industries and sectors enables JLT Re to ask smarter questions, innovate and deliver better results tailored to meet client needs.

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About Jardine Lloyd Thompson

Jardine Lloyd Thompson is one of the world’s leading providers of insurance, reinsurance and employee benefits related advice, brokerage and associated services. JLT’s client proposition is built upon its deep specialist knowledge, client advocacy, tailored advice and service excellence.

JLT is quoted on the London Stock Exchange and owns offices in 40 territories with more than 10,600 employees. Supported by the JLT International Network, it offers risk management and employee benefit solutions in 135 countries.

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contact Isabella Gaster
Head of Communications & Marketing, JLT Re