According to the latest analysis by the Swiss Re Institute (SRI), China is poised to contribute significantly to the global insurance landscape, with projections indicating a substantial 17% share in overall global additional premiums, amounting to an impressive $256 billion between 2025 and 2034.
The SRI’s recent sigma study, titled “Life Insurance in the Higher Interest Rate Era: Asset-Savvy is the New Asset-Light,” delves into the evolving dynamics of the insurance market. It reveals that advanced markets are expected to drive a substantial portion of additional premiums, accounting for $900 billion or 61% in absolute terms over the next decade. Meanwhile, emerging markets are anticipated to play a pivotal role, contributing an estimated $578 billion or 39% to the global insurance landscape.
The study forecasts a substantial surge in global insurance savings premiums, totaling an additional $1.5 trillion over the next decade. This surge is attributed to consumer preferences shifting towards life-savings products that promise higher retirement incomes. Consequently, total global premiums are expected to reach $4 trillion by 2034. This projected growth starkly contrasts with the modest $300 billion increase witnessed in global life insurance premiums throughout the low interest-rate decade spanning from 2010 to 2019.
Jerome Haegeli, Chief Economist of the Swiss Re Group, highlighted the transformative impact of higher interest rates on the outlook for life insurance growth and profitability. He emphasized that savings products have become increasingly appealing to consumers in the wake of a decade characterized by weak demand and low returns.
“Higher interest rates are a game changer, providing life insurance and pension products a tailwind to much better tackle the retirement savings challenges of ageing demographics,” stated Haegeli. “Savings products are attractive again as a direct consequence of normalising interest rates. Higher investment yields also benefit long-duration protection products.”
Echoing Haegeli’s sentiments, Paul Murray, CEO of Life & Health Reinsurance at Swiss Re, underscored the positive market growth witnessed in response to higher interest rates. He emphasized the expanded array of attractive options available to consumers seeking to secure their retirement income.
“Higher interest rates give consumers more attractive options to secure their retirement income, and we are seeing very positive market growth for life insurance to meet this need,” remarked Murray. “Higher interest rates also allow insurers to meet their cost of capital. Reinsurers can furthermore support life insurers by freeing up capital, boosting underwriting capacity, and focusing on product innovation for capital-light growth.”
