Then, Covid-19 hit the world economy like a meteorite. The sudden stop of economic activity around the globe will batter insurance demand, too: Global premium income is expected to shrink by 3.8% in 2020, with life insurance probably hit more than P&C business with growth rates of -4.4% and -2.9%, respectively. Thus, the impact of the Corona pandemic is going to be three times stronger than that of the global financial crisis, when global premium income decreased by 1.0%. Compared to the pre-Covid-19 growth trend, the pandemic will shave around EUR 360bn from the global premium pool (Life: EUR 250bn, P&C: EUR 110bn).

2020 is lost to the virus, no doubt about it. More interesting is the question about what comes after Covid-19. Basically, we see three trends, already in place before, that will gather steam in the coming years: Digitalization of the business model, the pivot to Asia and the growing significance of ESG-factors. While Asian players lead in technology, European peers are ahead with ESG. But dominance of the global insurance industry will be decided in Asia – Asian households emerge as the consumer of last resort, driving global insurance demand.

Western Europe clocked growth of 4.3% in 2019, up from 3.8% in the year before. Both segments, life and P&C, contributed to the increase in premiums: Life posted strong growth at 5.1% – only the second time since the great financial crisis that growth surpassed 5% – and P&C at 2.5%, down from 3.5% in 2018. Total premiums reached EUR 1,063bn in the region, almost three quarters of them written in the “Big 4” (UK, France, Germany and Italy). 2020, however, will be challenging for Western Europe – to put it mildly: Premium income is ex-pected to decline by a whopping 4.7%, with life insurance shrinking by 4.8% and P&C by 4.5%, reflecting the fact that Europe is one the region hardest hit by Covid-19. Long-term prospects look a little brighter, though: the region will return to growth in 2021 and the pre-Corona premium volume will be reached in 2022. Until 2030, the region will see an average growth rate p.a. of 2.2%, a tad above the average speed of the previous decade. Life and P&C are expected to grow at roughly the same speed. 

After the challenging decade following the great financial crisis, a battle-tested European insurance industry proved remarkably resilient during Covid-19. The outlook, however, is less encouraging. As in other fields, Europe is falling further behind the US and particular Asia. Just before the great financial crisis, its global market share was still at par with the US – and far ahead of Asia’s. At the end of this decade, it will be 6pp behind the US and a whopping 15pp behind Asia. Covid-19 should be seen as a wake-up call for Europe to finally get its act together and initiate higher and more inclusive growth.