India’s Leading BFSI and FinTech Companies 2021

40 In 2019, global insurance markets witnessed healthy growth in 2019 as total global direct premium increased by 2.9% (in real terms) largely driven by the robust growth in emerging markets including India. Amongst segments, real growth in non-life insurance premium at 3.5% outperformed the life insurance sector, which reported 2.2% growth in real premium during the year. In the non-life insurance segment, motor insurance was the key growth driver. While the global insurance sector witnessed healthy growth in direct premium, profitability continued to remain under pressure. The persistent low interest rates in advanced markets had an adverse impact on profitability of life insurers, especially in Europe. 2.3 0.6 1.1 2.9 2.8 0.5 0.6 3.4 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Advanced Markets Emerging Markets Asia-Pacific Worl d trillion US$ Regi onwise life & non-life insurance premium Life Non-life Global Insurance Market – Key Highlights ƒ ƒ Total insurance premium of global insurance market touched US$ 6.3 trillion or 7.2% of global GDP in 2019. ƒ ƒ Amongst regions, advanced markets reported lowest growth of 2.1% in total real premium in 2019. ƒ ƒ The real premiumgrowth in some European economies was significantly affected due to insurance companies’ responses to Brexit. ƒ ƒ Emerging market economies reported a robust growth of 6.6% in total real premium in 2019, largely driven by expansion in China. Going further, the outbreak of the COVID-19 pandemic in February 2020 pushed the world economy in themidst of perhaps the deepest recession of our lifetime. Estimates by the World Bank peg the global GDP decline during the year 2020 at 4.3%. The pandemic has certainly impacted the insurance industry as well, albeit not as much as was previously feared. For instance, the Swiss Re Institute estimates global life premium volumes to have contracted by 4.5% during the year due to rising joblessness, reduced purchasing power and extremely low interest rates, which have dented the attractiveness of saving-type insurance products. However, this contraction is much lower than was initially anticipated. The Swiss Re Institute expects life premiums to bounce back to 3% growth in 2021 on the back of economic recovery, increased risk awareness and also due to greater use of data analytics and digital distribution channels by insurers and brokers. Emerging markets are expected to remain the engine of growth, led by China. On the other hand, global non-life premiums are expected to have grown by 1.1% in real terms in 2020. Going further, a 3.6% growth is expected in 2021, with premium volumes expected to rise above pre-pandemic levels by the end of 2021. This trend is likely to be supported by rate hardening in commercial lines of business, strong demand amidst rising risk awareness and rising claims. Overall, however, abysmally low interest rates and higher claims are expected to hold back insurer returns and profitability. Amidst the current landscape, Asia is expected to recover more quickly. The world is witnessing a shift in global insurance market opportunities to emerging countries within Asia. China’s share in global premiums, currently at 10%, is expected Insurance Dun & Bradst et