The average annual growth rate of global insurance premiums since the financial crisis remains below the pre-crisis rate. The trend mirrors slower economic growth, and also a slowdown in growth of global trade volumes.
Global insurance premiums grew by 3.8% in real terms in 2015, amidst variations in regional growth rates, Swiss Re's latest sigma report says. The overall performance was steady after a 3.5%-gain in direct insurance premiums written in 2014, and coming in an environment of just moderate (2.5%) global economic growth, the latter a key driver of insurance demand.
Global trade grew about twice as fast as world GDP between the early 1990s and mid-2000s, but has only grown at the same pace as GDP in more recent years. The sigma report notes that the slowdown in trade has in part been cyclical, due to sluggish economic activity.
Trade should pick up again once economic activity accelerates, but the slowdown also reflects deeper, structural factors. These include, for example, limits in the further dispersion of global supply chains, protectionism and the transitioning of the Chinese economy from export- and investment-led growth to domestic services and consumption.
“The trade slowdown has reduced global growth, which in turn impacts insurance premium growth generally. Given that the structural factors behind the trade slowdown are likely to persist, a persistent slowdown in global trade will lead to lower growth in marine and credit insurance in particular,” says the report.