World insurance set for recovery in 2010: Swiss Re

The world insurance market is likely to remain subdued in 2009 and recover with an economic upturn next year, a study by Swiss Re, one of the world’s largest re insurers, said Tuesday.

Growth in life insurance premiums, the industry’s biggest earner, “is expected to remain subdued and may even turn negative” this year as turbulent stock markets and “gloomy” employment prospects depress sales of certain savings funds, Swiss Re said in a study.  “As the economy recovers, we expect both higher life premiums and better investment results as asset prices are expected to improve,” said Daniel Staib, one of the authors of the study on insurance markets in 2008. “This will not only have a positive impact on profitability, but also on shareholder capital and the ability to raise capital.” In the medium and long-term, the outlook for life insurance remains positive, he added in a statement. Demand for other types of insurance is likely to “remain flat” in line with the economic climate, according to Swiss Re. The study said insurance markets were propped up by emerging economies last year after the post-September financial slump hit premiums in industrialised countries.

Overall world insurance premium volume rose slightly to 4.27 trillion dollars but fell when adjusted for inflation by 2.0 per cent compared to the previous year, Swiss Re’s study said. Global life insurance premiums fell by 3.5 per cent while non-life decreased by 0.8 per cent. Swiss Re said life insurance growth was hardest hit by the financial crisis, with sharp falls in Britain, France and Italy. But in emerging economies life premium growth accelerated by an average of 14.8 per cent, according to the study.