Allianz Global Insurance Report 2022: A decisive decade

According to the latest Allianz Global Insurance Report, global premiums grew by 5.1% in 2021 (life: +4.4%; p&c: +6.3%), thanks to strong economic tailwinds, rising risk awareness and record-high savings buoyed by booming markets. Total premium income reached EUR 4.2trn (life: EUR 2.5trn and p&c: EUR 1.7trn). But what made 2021 really remarkable is the composition of premium growth: More than two-thirds were generated in Western Europe and North America, with the US market alone accounting for half of the increase. Thus, 2021 represents an unusual end to the past decade in which growth was much lower (+3.6% per year on average) and driven by Asia, which accounted for 40% of all additional premiums, more than half of them written in China. As a consequence, China’s global market share doubled to 12%.
2022 was expected to be another bumper year for the insurance industry, but the invasion of Ukraine has dashed those hopes. Premium income is likely to grow by roughly 1pp slower than originally assumed as the war takes its toll on economic activity and confidence, even as inflation supports the top line. Overall, we now expect global premium income to grow by +4.8% in 2022, with life and p&c developing almost in step (+4.9% and +4.6% respectively). This figure must be considered against the backdrop of a global inflation rate of 6.2% this year.

Despite the great uncertainties today, we are not too pessimistic about the more distant future. After all, these uncertainties are precisely the breeding ground for rising risk awareness; they reinforce the impact of the two megatrends of climate and demographic change, which will continue to be the main drivers of demand for risk protection. Overall, we expect annual growth of +4.8% over the next 10 years (life: +4.9%; p&c: +4.6%). This corresponds to an increase in premium income by +67% or EUR2.8trn by 2032, of which just under EUR1.8trn will be generated by the life segment (+69%) and just over EUR1trn by the p&c segment (+63%).

The pandemic and the war in Ukraine are wake-up calls for better risk management, and even more demand for protection. The industry must succeed in maintaining its economic and social relevance, offering innovative solutions for new and rising risks. The questions of insurability and affordability are likely to become increasingly urgent in the coming years. This requires a level of creativity and collaboration with all stakeholders, customers, carriers, and policy makers even beyond previous efforts.

Western Europe recorded an increase of 3.6% in total premium income in 2021 (life: 3.8%, P&C: 3.3%); total premium income exceeded EUR 1,1trn. Reflecting the impact of the Ukraine war, growth is likely to decline to 2.9% in 2022 (life: 2.8%, p&c 3.1%). After that, however, an acceleration is also expected in Europe, with average growth over the next ten years expected to settle at 3.3% (life: 3.3%, non-life: 3.3%), well above the level of the last decade (1.6%), which was marred not only by Corona but also by the euro crisis.

Both lines of business might indirectly benefit from the recent crises. In the life business, increased risk awareness in the wake of the Covid 19 crisis and the inflation-triggered end of zero interest rates should make many savings and pension products more attractive again. In the p&c business, climate-mitigation efforts will intensify, first and foremost the decarbonization of energy supply. The quest for energy independence makes this even more important now. This requires major investments from both the private and public sectors and creates a high need for risk protection as new risks will emerge with this radical transformation of our economy.

In 2021, the German insurance market grew by a meagre 0.3%. While the p&c segment clocked solid growth of 2.4%, the life segment declined by 1.4%. For 2022, growth of 2.0% (life: 1.8%, p&c: 2.3%) is expected. Over the entire next decade, Germany is expected to achieve average growth of 2.5% per year with both segments moving in sync. That would be slightly above the previous decade’s level (+1.9%), as the life business should become again a little stronger in the coming years. It would, however, be almost one percentage point below the pace of the rest of Europe.

Arne Holzhausen
Allianz SE
Patricia Pelayo Romero
Allianz SE
Michaela Grimm
Allianz SE