Emerging economies are expected to outperform advanced markets over the next five years despite recent slowdowns, according to a report by JLT Re.
The report, “Emerging Markets: Moving Ahead”, examined the significant opportunities on offer for the (re)insurance industry in emerging markets over the next five years, with a specific focus on seven key markets in emerging Asia, Latin America and sub-Saharan Africa: China, India, Thailand, Brazil, Mexico, Kenya and South Africa.
The seven emerging markets are set to see significant non-life premium growth over the next five years and mostly outpace more subdued expansions in certain advanced countries, said Mr Stuart Beatty, CEO, JLT Re Asia Pacific. “Perhaps even more crucially, they are also expected to gain an increasing share of the global non-life insurance market as insurance penetration and insurance density levels rise. Indeed, the catch-up potential associated with insurance penetration and density rates in emerging markets reinforces our view that these countries will be crucial in driving long-term insurance sector growth as carriers seek new and profitable revenue streams,” he said.
“Positive fundamentals such as expanding middle classes in urban areas, increased asset ownership, infrastructure investments and industrialisation will drive this expansion. At JLT Re, we see this ‘new world order’ as a huge opportunity. Of course, a thoughtful approach is needed when expanding or entering into new territories and there are inevitably new risks which need to be managed,” Mr Beatty added.
Mr David Flandro, Global Head of Analytics, JLT Re, said: “Whilst it is true that some emerging markets have suffered downturns since 2014, projected economic forecasts over the next five years remain encouraging. Overall, emerging market economies are expected to expand by more than 4% in 2016, which would represent the first acceleration in growth since 2010. Of course, not every emerging economy will flourish, but emerging markets, in aggregate, are expected to grow at between two and three times the pace of developed markets through to 2021.”