Primary non-life

Market overview

The global non-life industry generated around USD 2 400 billion of premium income in 2018, of which around 22% came from emerging markets. Non-life insurance ranges from standardised motor and household insurance to sophisticated tailor-made liability and property covers, including specialty commercial and industrial risk insurance.

Market performance

Premiums have risen moderately in almost all countries/regions in 2018 due to stronger economic growth. Global non-life premiums were up an estimated 3% in real terms, after a 3% gain in 2017.

The global aggregate is being driven by the emerging markets, where we estimate 8% premium growth in 2018. Non-life business in China and India has been particularly strong, with combined premiums up 12% in real terms this year. Agriculture insurance has been a main growth driver in both countries. Alongside economic recovery, non-life sector growth dynamics in Latin America and Africa were improving, but with 3% still significantly below long-term trend.

Advanced market premiums have grown by about 2% this year on the back of strong economic momentum, in particular in North America, and also others. In regions hit by the record natural catastrophe losses in 2017, harder rates in property lines have supported the premiums increase. Notable negatives for the advanced market aggregate this year has been declining premium income in motor in Japan and the UK, due to rate cuts in those markets. In Japan, the cuts resulted from benign claims trends and in the UK, as some insurers start to pass on expected cost benefits from the government’s planned reforms to personal injury compensation.

Underwriting conditions have remained soft, particularly in commercial insurance, despite a moderate improvement in pricing in 2018. Marsh’s global insurance market index ticked up moderately throughout the year. Even so, stabilisation of the soft market trend of the last years has not been sufficient to significantly narrow the profitability gap that still besets the non-life insurance sector.

We expect a slightly positive underwriting result for the global non-life sector. Overall profitability of the global property/casualty insurance remains at moderate levels, also driven continuing low investment returns.

Outlook

The global economic outlook for 2019 and 2020 is positive and demand for non-life insurance is expected to increase. We expect real growth of 3% for the global aggregate, composed of 2% for advanced markets and up to 8% for emerging markets.

In terms of profitability outlook we expect, in the absence of clear direction on rates, underwriting results to remain stable at current levels, or to slightly improving. Positive rate dynamics and demand for new types of cover is expected to support premium growth in the coming years.