This section provides a snapshot of the insurance business globally. It first shows the penetration of the insurance sector within the economy across jurisdictions. It then provides a breakdown of the main classes of non-life insurance, which in many jurisdictions is the main branch of the insurance business. This section finally examines where life insurance business is more prominent and what types of life products are available.
Global Insurance Market Trends 2024
Abstract
The importance of the insurance industry within the economy varies considerably across jurisdictions. Insurance penetration, which is the ratio of premiums written over GDP, is a traditional indicator of the development of the insurance business (Kwon and Wolfrom, 2017[1]). Insurance penetration was the highest in some of the largest economies (e.g. France, the United Kingdom, the United States) and some other jurisdictions, mainly in Europe and Asia in 2023 (Figure 1.1). By contrast, insurance penetration was generally lower among Latin American countries (MAPFRE, 2022[2]). Low insurance penetration could reflect a potential lack of financial protection of people and businesses against certain risks for which insurers can provide coverage.
As a percentage of GDP
Source: OECD Global Insurance Statistics.
The non-life sector is generally the largest segment of the insurance industry, accounting on average for the largest share of premiums written. Non-life insurance covers many risks that corporations and individuals may face (e.g. vehicles, property, belongings). Premiums written for non-life insurance accounted for 55% of total premiums written in 2023 on average among the 54 reporting jurisdictions. Some jurisdictions recorded a much higher share of premiums written for non-life insurance, exceeding 80% of total premiums (e.g. Bulgaria, Croatia, Romania). The economic performance of jurisdictions, measured by GDP per capita, has a positive but small impact on the penetration of non-life insurance, which generally remains below 5% of GDP (Figure 1.2).
Source: OECD Global Insurance Statistics and IMF.
Motor vehicle insurance is one of the key activities for the non-life industry. Premiums written for motor vehicle insurance accounted for over a third of non-life premiums on average among reporting jurisdictions in 2023, and even exceeded 50% in several European countries, Japan and Chinese Taipei (Figure 1.3). Motor vehicle insurance includes coverage against damage or loss of motor vehicles as well as motor third-party liability (MTPL). MTPL covers liability arising out of the use of motor vehicles. Many jurisdictions require car owners or drivers to have MTPL insurance so that victims of traffic accidents can receive coverage for their injuries.1 In the United States, each state sets the requirements for motor vehicle insurance, with nearly all having minimum requirements for liability coverage.2
As a percentage of total gross premiums
Note: For Korea, "Fire and other property damage insurance" only covers fire insurance; other property damage insurance is under "Other non-life". "Accident and health insurance" for Korea reflects both protection and the savings component of Korean accident and health insurance products.
Source: OECD Global Insurance Statistics.
Health insurance is also a major class of non-life insurance. Premiums written for accident and health insurance accounted for 23% of non-life premiums on average in 2023 among reporting jurisdictions. In a few countries, such as the Netherlands and Switzerland (OECD, 2022[3]), private health insurance is the primary mechanism through which health care coverage is obtained. In most countries, private health insurance plays a secondary role.3 Private health insurance is generally voluntary with some exceptions (e.g. Chile, France, Germany, Netherlands, Switzerland).4 Private health insurance coverage is high in countries mandating participation in private health insurance (for instance in France, the Netherlands and Switzerland where nearly all the population is covered (OECD, 2023[4])) and countries with no public universal healthcare such as in the United States.5 This high proportion of people with private health insurance coverage helps to explain to some extent the large share of accident and health insurance within total non-life premiums written in these jurisdictions (82% in the Netherlands, 56% in the United States, 51% in Switzerland, 43% in France).
Fire and other property damage insurance is also a significant segment in the non-life sector. Fire insurance is a type of property insurance covering damages and losses caused by fire. Property insurance provides coverage against fire, theft and other threats to assets and equipment in private houses and companies. Property insurance can include different types of policies (e.g. homeowners insurance, renters insurance). Customers of property insurance include landlords, homeowners, and tenants.6 Property insurance may be a condition to obtain a loan when homeowners take out a mortgage.7
Other non-life lines of insurance include other personal and commercial insurance policies, such as transport/freight insurance and travel insurance. Premiums written for these other policies can be significant. For example, in Luxembourg, marine, aviation and other transport insurance accounted for over 20% of premiums written in the non-life sector in 2023, highlighting its role in specialty insurance.
The life insurance sector is generally more prominent in advanced economies. Life insurance traditionally offers protection against risks affecting the policyholder directly but it can also provide a contractual vehicle for investment and savings. Life insurance includes various types of products (see Box 1.1 at the end of this section). Individuals may purchase life insurance on their own (individual insurance) or get coverage through their employer (group insurance).
In 2023, the share of life premiums written exceeded 75% of total premiums written in advanced economies in Asia (Hong Kong (China), Japan, Chinese Taipei, Singapore) and several European countries (Ireland, Luxembourg, Sweden). Advanced economies generally have a high level of income per capita. Life insurance penetration increases with GDP per capita (more strongly than for non-life insurance), although with some variability at higher levels of GDP per capita (Figure 1.4). In wealthier jurisdictions, individuals have higher incomes and are thus more able to afford life insurance products.
Source: OECD Global Insurance Statistics and IMF.
Individual life insurance policies that pay benefits upon the death of the policyholder are the most popular life insurance products among some advanced economies in Asia. For example, most of the life insurance premiums were for whole life insurance in Hong Kong (China), individual insurance policies in Japan (in particular term insurance and whole life) and endowment policies in Chinese Taipei.8 Premiums written for life insurance products were also significant in the United States (especially whole life insurance with USD 67 billion in net premiums in 2023), although not as large as for annuity products (USD 360 billion). Life insurance products such as whole life and term insurance may be used as a financial tool for protecting the financial well-being of families in the event of the death of the insured person.
Population ageing and the design of the payout of asset-backed pensions can also support the demand for annuity products.9 Life annuity products provide a regular stream of income to retirees. They can protect retirees against longevity risk, which is the risk that people live longer than expected and as a result outlive their retirement savings. All OECD countries offer the option of receiving retirement benefits as a lifetime income. This option is mandatory for several occupational plans and mandatory for personal pension schemes (e.g. Denmark, Sweden). Adverse selection may reduce or limit the take up of annuities in voluntary markets, as annuities may appear expensive for an individual who may have a lower life expectancy than a typical annuitant (Fong and Li, 2022[5]). While life annuity products are not available in Costa Rica due to a lack of annuity markets, annuities are nevertheless a possible payout option from mandatory personal pension plans (IMF, 2024[6]).
Unit-linked products have become increasingly common in some jurisdictions as insurers have moved away from insurance products with promised rates of return or guarantees providing downside investment protection. For example, in Israel, unit-linked premiums accounted for more than 60% of premiums written in the life sector in 2023. Unit-linked products give policyholders access to investment funds and allow them to select from a range of different funds based on their investment objectives and tolerance for risk. Policyholders often bear the investment risks for this type of product and thus returns can be volatile.
Life insurance includes a variety of products, such as:
Whole life insurance: It pays benefits to beneficiaries upon the death of the policyholder. This insurance provides coverage throughout the life of the policyholder.
Term insurance: It provides a guaranteed payment to beneficiaries upon the death of the policyholder if the policyholder dies during the term specified in the contract.
Endowment policies: These policies provide a payment after a specific term (maturity of the contract) or at the death of the policyholder.
Annuity contracts: These products offer a stream of income payments to individuals (e.g. upon retirement). Insurers may offer different types of annuity contracts with different types of payments, such as fixed payments, indexed payments (e.g. on inflation, profits) (OECD, 2016[7]).
Unit-linked products: The policy gives different investment options to policyholders who typically bear the investment risk but also benefit from the potential investment gains in financial markets.
Individuals may obtain coverage in different ways. For instance, they may purchase a life insurance product on their own (individual insurance) or get coverage through their employer (group insurance).
Credit institutions may require individuals seeking to obtain a loan to purchase certain forms of life insurance (e.g. term insurance). These products can help to pay off the outstanding balance on a debt if the borrower dies before fully repaying it.
← 3. When it plays a secondary role, private health insurance may cover some remaining costs after basic coverage from the public healthcare system (complementary insurance), provide additional services (supplementary insurance) or give faster access or larger choice of providers (duplicate insurance).
← 4. In Chile, people opting out of the public health care coverage have to take up private health insurance coverage for a minimum of services. In France, private-sector employers have had to offer a complementary private health insurance to their employees since 2016. In Germany, public health care coverage is the norm. However, people opting out of the public health care coverage have to take up private health insurance coverage, which is substitutive in terms of services.
← 5. Employment-based insurance is the most common type of private health coverage in the United States (with 53.7% of the population covered) followed by Medicaid (18.9%) and Medicare (18.9%). See Health Insurance Coverage in the United States: 2023
← 7. Is Home Insurance Mandatory? | Compare the Market and Property Insurance: Definition and How Coverage Works.
← 8. See Insurance Authority - Annual Long Term Business Statistics (Hong Kong (China), Statistics | The Life Insurance Association of Japan (Japan) and Statistics- Insurance Bureau, Financial Supervisory Commission (Chinese Taipei).