Global Insurance Market Trends 2024

Executive summary

Insurers have been operating in an environment of higher inflation and interest rates in recent years, although inflation started to fall in 2023 and investors were expecting cuts in interest rates. Against this backdrop, the 2024 edition of the Global Insurance Market Trends series explores the overall performance and health of the insurance industry in 2023. It first assesses the importance of the insurance sector within the economy across reporting jurisdictions. It then examines premiums and claims trends in the non-life sector in 2023, and non-life underwriting performance, as well as trends in premiums and payouts in the life sector. This edition examines the investment performance and profitability of insurers in 2023.

The insurance business is unevenly developed around the world, with lower coverage in less advanced economies

The penetration of the insurance industry, which is measured as premiums written as a percentage of GDP, varies considerably around the world, with penetration levels generally higher in more advanced and wealthier economies. While premiums written exceeded 10% of GDP in France, the United Kingdom, the United States and some other European and Asian jurisdictions, premiums accounted for a much lower proportion of GDP in many Latin American countries and some European countries. Non-life insurance business is generally the dominant sector within jurisdictions, accounting for the largest portion of premiums written on average around the world, due especially to motor vehicle insurance that is generally mandatory. Life insurance tends to be more developed in jurisdictions with a higher per capita income, where customers may have higher demand for life insurance products.

The prices of non-life insurance policies rose in response to continued cost pressures

Insurers faced increased costs pressures, reflecting inflation in claims costs and the hardening of reinsurance markets. Cost pressures led to increases in premium rates in the main non-life classes (motor vehicle, health and property insurance), which contributed to the growth of premiums written in the non-life sector. Premiums written grew by 12.4% on average in nominal terms in 2023 and 6.2% in real terms, double the real growth rate in 2022. In most jurisdictions, the non-life sector registered positive underwriting performance.

Higher interest rates have had mixed effects on the life insurance sector

The increase in interest rates had direct and indirect impacts on the life insurance sector, with positive and negative effects. In the context of higher interest rates, individuals could expect a higher income from annuity products and higher rates from guaranteed life investment products, which in a number of jurisdictions led to an increased demand for these products, and a shift away from non-guaranteed products where policyholders bear the investment risk. In some jurisdictions, higher interest rates led some customers to surrender their life insurance policies and redeploy their savings, for instance into other financial products or to support the purchase of a home. Higher interest rates also translated into higher mortgage rates, increasing the cost of credit in housing markets and reducing the number of transactions and loans. This has had an indirect impact on the sale of life protection products in those jurisdictions where credit institutions require borrowers to purchase such products. Gross written premiums in the life sector grew overall in nominal terms, in just over two thirds of reporting jurisdictions.

The investment performance of insurers turned positive following developments in financial markets

Insurers achieved a positive investment rate of return in real terms in around two thirds of the reporting jurisdictions. This contrasts with 2022 when in nearly all jurisdictions insurers had negative real investment rates of return due to rising interest rates and falling equity valuations. Falling government bond yields toward the end of 2023, reflecting reduced inflationary expectations, positively impacted bond valuations. Global equity markets also demonstrated strong performance in 2023. These financial market developments boosted the overall investment performance of insurers.

The profitability of insurers broadly improved, with any previous negative performance generally reversed

Insurer industry profitability in 2023 broadly improved, reflecting positive underwriting performance and investment gains. The negative profitability experienced in one or more sectors (life, non-life and/or composite) in some jurisdictions in 2022 was for the most part reversed. These gains contributed to the increase in the shareholder equity of insurers. Many jurisdictions, especially in Europe, started implementing new accounting standards in 2023 (IFRS 17), which has had implications for the recorded liabilities of insurers and their shareholder equity.