October 24, 2018 11:30
Photo : Stockvault.net
Swiss Re is interested since a few weeks the effects of economic upheavals on the insurance industry. The reinsurer stressed this time that the growth of the industry is dependent on that of the economy.
“A long time ago that the economic growth has been identified as the main engine of the development of the insurance market,” said Daniel Staibsenior economist at Swiss Re, in a note of the most recent newsletter Economic Insights. The Journal of insurance has obtained a copy.
This observation is particularly true for property and casualty insurers, said Mr. Staib. He noted that their growth, from 1967 to 1990, has been parallel to that of the economy, at a higher level. Since 1990, this growth is rather similar, ” he stressed. It ignores even the ups and downs recorded related to the pricing of insurance premiums.
“The future lies in innovation”
Even if the uncertainty continues to loom over the global economy, it does not mean that insurers must abandon all hopes of growth, ” said Mr. Staib. They must innovate to achieve their full potential by investing in the long term. Thus, they will build a greater resilience, while showing sustainable economic growth.
Mr. Staib identifies three drivers of growth for insurers. All have one thing in common : innovation.
The first, covering the large gap of coverage in several markets, including that of the mortality insurance. In several countries, the rate of people not having life insurance is significant. “Life insurers must innovate to fill that gap and ensure people that they did not cover before,” he says.
Second vector of growth : ensuring losses that are not currently in natural disasters. New insurance coverage will, believes Swiss Re, both for companies and for individuals.
The third track is raised by the reinsurer is also related to cover needs that are not, this time on the side of risk, intangible, to which companies face. In particular as regards their reputation, business interruption or loss of data.
40 % of long-term investments
Swiss Re also publishes another statistic that is somewhat surprising. The reinsurer advance that 40% of the global assets invested in long-term belong to the insurers. Swiss Re assesses this amount at 80 billions of dollars, or the equivalent of world GDP.
“Insurers can only think of reaching heights of growth of the past. It doesn’t mean that they can’t build businesses resilient “, said Mr. Staib.
He added that with the support of regulatory policies and public, those who invest for the long term can better absorb the risks of the market and provide capital to projects that generate profitable growth, especially in infrastructure. “As the economic momentum is an important determinant underlying the growth of insurance premiums, an insurance industry that works well and can also help to promote economic resilience, and social responsibility. “