Predicting what the future might hold is far from straightforward, especially given the potential for significant disruption from major events such as pandemics, other natural catastrophes, terrorism, wars, etc. not to mention the positive and negative impacts of political interventions (e.g. reforms to health / welfare or tax systems), stock market volatility and technological innovations.
Nevertheless, Insuramore believes that the following are plausible forecasts for the global insurance market by 2040:
- discounting inflation, and in terms of total gross direct premiums written (plus related inflows from retirement-related products such as annuities), the worldwide market value is likely to be worth in the region of USD 11.5 trillion by that year;
- this could break down between approximately USD 5.3 trillion due to life / annuity / retirement business, USD 3.1 trillion due to health cover and USD 3.1 trillion due to P&C (non-life) insurance;
- furthermore, measured in the same way, and in line with its probable economic trajectory, the value due to China is on track to be worth around USD 2.4 trillion in 2040 which would be about 20.5% of the forecast global total in that year, up from around 11.1% in 2020;
- however, this would remain substantially less than the value attributable to the US at a projected USD 3.9 trillion in 2040 (or 33.8% of the global total, down from approximately 35.2% in 2020);
- there may be further consolidation among insurer (carrier / underwriter) groups:
- Insuramore’s data (see Rankings) indicates that the top ten groups worldwide accounted for just 17.2% of total gross direct premiums written (and related flows) in the global insurance market in 2019;
- for life / annuity / retirement, health and P&C (non-life) business in particular, the equivalent percentages were somewhat more concentrated at a respective 20.9%, 43.0% and 25.6%;
- in contrast, the versatility and growing success of their model, especially for P&C business, is likely to cause the number of MGAs, MGUs and comparable fronting businesses to expand globally, and interest in this sector will remain strong among intermediaries and private equity investors, as well as insurer (carrier / underwriter) groups;
- while growth in the popularity of vehicle sharing models (and perhaps driverless vehicles) may cause premiums for fleet auto (motor) insurance to expand more rapidly than those for insurance acquired by individual vehicle owners, most customers, especially away from urban centres and in less developed markets, are expected to continue to want to have their own vehicles;
- in regards to commercial P&C (non-life) insurance, the outlook is thought to be most propitious for business activities that, in aggregate, are likely to experience superior underlying growth such as clean energy, healthcare / life sciences, professional services and technology;
- for each of life / annuity / retirement, health and P&C (non-life) business, the demand for solutions for gig workers and the self-employed seems likely to outgrow that for other commercial enterprises not least because their number within the total population seems destined to increase;
- in the wake of the emergence of the next generation of insurance buyers, digital distribution and servicing will carry on growing, especially in relation to consumers and small / medium-sized enterprises… indeed, there is hardly a major insurance provider in the world that has not articulated its ambition to be a digital leader.