Allianz Global Insurance Report 2024 Years of transformation lie ahead for the insurance industry

Executive Summary

Extremely strong growth

According to the report, the global insurance industry grew by approximately 7.5% in 2023, the fastest growth since 2006, the year before the GFC. In total, insurers worldwide collected €6.2 trillion in premiums from life insurance (€2,620 billion), property and casualty (€2,153 billion) and health insurance (€1,427 billion). Over the last three years alone, global premium revenues have increased by as much as EUR 1.1 trillion, or 21.5%. However, strong development should be seen in the context of high inflation. In real terms, the picture becomes less impressive. Real premiums have almost stagnated, increasing by only 0.7% since 2020.

Unlike in 2022, when the motor insurance segment was responsible for the global premium growth, the growth in 2023 was more balanced. All three segments recorded fairly similar increases – living at 8.4%, cost of living at 7.0% and health at 6.6%. The recovery in the life insurance segment – which grew by only 3.1% in 2022 – is mainly driven by Asia (+14.9%), the largest life insurance market in the world, with a global market share of 39.0% . For p&c, North America remained by far the largest market (+7.1%) (world market share: 54.2%).

While in many other industries traditional markets are losing importance compared to new, emerging markets, the global insurance industry is still dominated by the United States. In fact, over the past decade, the US insurance market could even increase its global market share from an already impressive 41.3% to an impressive 44.2%. However, other “old” markets such as Western Europe (-6.7 pp) and Japan (-2.8 pp) grew more or less in line with expectations, losing market share, primarily to China, which was able to almost double its share in the world to 10.6%.

The focus is on insurance

As risk increases around the world, the limits of insurance are coming into focus. Preventive measures, new technologies and smart partnerships can push the boundaries of insurance, but they cannot remove them. The lack of insurance should be respected. The appearance of insurability – through artificially low prices that are inappropriate to the risk – leads to excessive risk exposure and increasingly higher loss amounts. The trade-offs between affordability and insurability – or, more generally, between our current and sustainable lifestyles – can still be resolved; but the necessary compromises will not be painful or costless. Ultimately, tackling the climate crisis is not just a matter of politics and money, but also of individual responsibility. An uninsurable world would not only be a world that has failed to address climate change, but also a metaphor for collective ethical failure in which every individual shirks from their moral obligation to reduce greenhouse gas emissions.

Closing the gap

Over the next decade, the global insurance market is expected to grow at a rate of 5.5% annually, which is exactly the same rate as global GDP; in previous decades, insurance growth lagged behind economic growth. The weights of the three segments will shift. The property and casualty insurance segment will grow by 4.7% annually, after 5.0% annually in the previous ten years, as inflation-related price increases fade away. The health segment is also expected to grow slightly slower – but at 7.3% per year, growth remains strong. Meanwhile, the life segment could grow by 5.1% per year (from 3.5% per year) taking advantage of higher interest rates. In total, the global contribution pool will increase by almost EUR 5 trillion.

The majority of this growth will be in the life insurance segment (EUR 1.887 billion), with Asia (excluding Japan) remaining the growth engine of the global life business (+7.3% per year). The region should account for half of the absolute increase in premiums (€928 billion), more than North America (€377 billion) and Europe (€323 billion) combined. While China (+7.7% per annum) will continue to dominate the region in absolute terms, the real growth champion in the coming decade is likely to be India (+13.6% per annum).

In the property and personal insurance segment, additional premiums will amount to EUR 1.427 billion by 2034. Despite significantly higher growth in Asia (excluding Japan: 7.1% per year) than in North America (3.8% per year), in absolute terms the latter region clearly dominates: EUR 584 billion in additional contributions in North America compared to EUR 376 billion in Asia (excluding Japan) and EUR 184 billion in Western Europe.

The strong premium outlook should not create complacency in the industry. The biggest challenge facing the industry is defending its relevance against an increasingly invasive condition. Growing polarization and inequality threaten to weaken the social fabric. The main task of the insurance industry in the coming years will be to meet these challenges, maintaining its social relevance as a force for equality and unity.

The next frontier

Artificial intelligence (AI) has the potential to disrupt industries at fundamental levels – from the business model to the value chain. However, few industries rely on the foundation of AI – data – as deeply as the insurance industry, making mastering AI a key competitive differentiator in the future. Historically, the insurance industry has not been at the forefront of productivity growth. Implementing GenAI can leapfrog the milestones of cost savings and efficiency gains. Artificial intelligence is not a magic bullet that will solve all problems. However, it has significant potential to reduce protection gaps by improving access, affordability and availability of insurance through increased personalization and better cost-effectiveness.