A Closer Look at The Global Insurance Industry

A Closer Look at The Global Insurance Industry


Aug 18, 2023

Blog Finance A Closer Look at The Global Insurance Industry

The past few years saw an unprecedented mix of factors impact the resilient global insurance industry. COVID-19 instigated a jump in claims, and turned global supply chains on their head, particularly in the financial industry, severely impacting other industries like tourism and aviation. To get through this period, these industries turned to their insurers to reimburse them for lost business. Now, global inflation continues to rear its head.

COVID-19 had a dual impact on the insurance industry. On the one hand, the pandemic raised concerns among life insurance companies about whether it would be possible to process all the reimbursement and claims due to the spike in death rates caused by the virus. On the other hand, the outbreak resulted in more people seeking an insurance policy to safeguard them against uncertainty. This in turn increased sales for companies.

Despite the circumstances, the global market for insurance was valued at $9.8 trillion in 2021 and is forecasted to grow from $5.6 trillion in 2022 to $9.8 trillion 2027, according to BCC Research.

Emerging trends in global insurance

According to the report “The Insurance Industry for Today & Tomorrow,” published by Capgemini, consumers, who are increasingly Gen Z and Millennials, may move from traditional approaches such as one-stop solutions to apps to manage and buy their policies. This is expected to cause reduced brand loyalty and the need for a greater emphasis on groundbreaking engagement for customer retention. The report concludes that in the new insurance ecosystem, it will become imperative for insurers to develop the right partnerships and use digital technology for real-time integration with these partners.

Furthermore, a burst of new players are entering the landscape. Retaining customers is therefore becoming difficult, but innovative tech platforms such as AI-based applications and AI integration in web platforms could help insurers to maintain their market positions. As the insurance ecosystem adopts digital technologies such as cognitive computing (machine learning, AI, advanced predictive analytics), the Internet of Things (IoT), wearables and other sensor-based devices, blockchain technology and robot process automation (RPA) in insurance claims, the insurance penetration rate is expected to increase in the forecast period.

Global Insurance Industry Market

BCC Research’s recent report Global Insurance Industry Market dives into the outlook for the industry. Rising interest rates, volatile equity markets, and geopolitical uncertainty all threaten to impact the insurance industry – BCC Research’s report provides the information and knowledge to help navigate these uncertain waters.

Demand for additional insurance policies and digitization across Asia-Pacific

APAC countries like China, India and Japan saw an increased consumer demand for insurance policies during the pandemic, prompted by growing concerns about medical aid. In 2020-2021, the Swiss Re Institute found that 30-40% of survey respondents from the Asia-Pacific region had adopted an additional insurance policy due to the pandemic. Similarly, 25-50% of the insured planned to have an additional policy. Plus, around 56% of the insured in emerging Asia are expected to buy additional insurance, while in developed markets, 13% of the insured buy an additional policy.

The digital habits undertaken during lockdowns have increased the awareness of insurance policies. This is another factor influencing the growth of the global insurance market. Plus, third-party non-incumbents such as Grab and WeChat are integrating data analytics and predictive analytics to offer more customized insurance products, which should help offer greater personalization – a growing trend across countless industries.

Higher inflation creates greater risk for insurers

In the post-pandemic landscape, ballooning inflation has been impacting the entire globe. This means that the cost of claims is rising, especially liabilities due to inflation. It’s a complex issue that leaves a longer tail of risk.

COVID-19 has had the greatest impact on the most vulnerable in society. White-collar workers were safeguarded by working remotely, while blue-collar employees were expected to work on the frontline, in higher-risk jobs. Governments have enacted by intervening in fiscal regulations and pushing direct transfers to businesses and households. They have also determined cooperative monetary policy, creating lower-cost credit.

The rising inflation rate is resulting in higher insurance premiums, which will lead to decreased use of insurance globally.

Increased demand for guaranteed return products and term insurance

When interest rates fall, guaranteed return products become more popular despite their lower rate of return. One reason for this is that these plans also include life insurance, as well as family protection. Concerns regarding this grew throughout the pandemic, in addition to the guaranteed returns upon maturity. This creates increasing opportunities for guaranteed return products.

Requests for term insurance have also been increasing, even though it is predominantly a push product. Term insurance is frequently the most cost-effective method to procure a considerable death benefit based on the sum insured and the premiums. The insurer bids to reimburse the beneficiary a guaranteed sum upon the death of the insured, in exchange for the insured or their beneficiary paying scheduled premiums. This is another window for insurers to maximise their opportunities.

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    Olivia Lowden

    Written By Olivia Lowden

    Olivia Lowden is a Junior Copywriter at BCC Research, writing content on everything from sustainability to fintech. Before beginning at BCC Research, she received a First-Class Master’s Degree in Creative Writing from the University of East Anglia.

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