A report by Swiss Re expects life insurance premiums across the Asia Pacific region to rise in real terms with Australia leading the way.
The report’s authors expect life premiums in Australia to increase by 10.5% this year.
The Sigma report also states that Australia’s economic growth will “…modestly boost group insurance”, which is bought primarily by the superannuation funds.
“We are positive on the outlook for global insurance premiums, expecting above-trend growth of 3.3% in 2022 and 3.1% in 2023,” states the report.
“This forecast is underpinned by rising risk awareness in both the life and non-life segments, as consumers and businesses alike seek protection following the shock of the covid-19 pandemic.
“Rising risk awareness is generating demand for more insurance protection. The pandemic has increased consumers’ awareness of health and mortality risk and underpinned life and health insurance premium growth.
Rising risk awareness is generating demand for more insurance protection…
“Our 2020 and 2021 surveys of consumer trends in major Asia-Pacific markets find consistent evidence of consumers’ rising awareness of health and mortality risks and a perception of being under-insured. The change in risk perception is reflected in observed growth in life and health insurance premiums.
“The broad-based elevation of risk concerns also helped sustain positive growth in life protection insurance premiums last year, with volumes up 1.5% in 2020 and 4.9% globally in 2021.”
The report states that the growth contrasts with previous crises, during which life premiums contracted. For instance, life protection premiums contracted 0.7% during the GFC in 2008 and remained almost flat in 2009, while health insurance premium growth slowed two percentage points to 3% during the GFC.
The report also states that digital and online insurance options were welcomed by many consumers.
…third quarter 2021 deaths were up by 40% over pre-pandemic levels…
“The pandemic has transformed consumers’ receptiveness to interacting with insurance digitally,” say the report’s writers. “Whether for sales, after-sale service, claims or add-ons, people now see online provision as essential.
“In Asia Pacific, our consumer surveys find two thirds (66%) of respondents see online features as key criteria for life and health insurance purchases.”
Interestingly, the Sigma report points to a mixed trend for excess mortality, with Covid-19 continuing to affect the life insurance industry.
It states: “In November 2021, North America is recording average daily death numbers similar to November 2020. Europe is seeing an increase in cases over the past several weeks, but this is not converting into a proportional increase in deaths or hospitalisation.
“Excess mortality shows a mixed trend, with most countries returning to positive excess mortality after having experienced negative excess mortality over the [northern hemisphere] summer months.”
The report states that unlike many European countries, the US has experienced continuous excess mortality since the start of the pandemic.
Elsewhere, US life insurer OneAmerica is reporting a rise in excess mortality. According to a report by The Center Square, the US$100 billion insurer says third quarter 2021 deaths were up by 40% over pre-pandemic levels.
“Just to give you an idea of how bad that is, a three-sigma or a one-in-200-year catastrophe would be 10% increase over pre-pandemic,” the firm’s CEO Scott Davison is quoted as saying. “So 40% is just unheard of.”