Swiss Re’s recent Economic Forum noted the strong opportunities for insurance protection in emerging markets and a solid outlook for the insurance industry in 2007.
The Forum, which began in London on Dec. 5, indicated that the “insurance industry can provide strong opportunities in the emerging markets following large disasters to protect economic development. In particular, public-private partnerships may serve to increase insurance penetration in these economies. For the global insurance industry as a whole, following an ‘extraordinary’ year in 2006, the outlook for 2007 is positive in terms of growth and profitability.”
The ongoing Forum will include Swiss Re’s analysis of the role that insurers and rein surers can play in providing coverage for emerging markets, especially to deal with “natural hazards.”
Thomas Hess, Swiss Re’s Chief Economist will join Roger Ferguson, Head of Financial Services, to discuss the Group’s annual review and outlook for the insurance industry.
Swiss Re’s experts have concluded that “public-private partnerships are key to increased insurance availability in emerging markets.” In 2005, average insurance penetration in those economies was only 3.6 percent, compared with a global average of 7.5 percent. “This contrasts starkly against the vulnerability to natural catastrophes of many emerging market countries, where a major disaster typically causes significant economic disruption, government resources to provide disaster relief are scarce and international aid is needed to begin rebuilding the economy,” Swiss Re noted.
“Insurance is the most efficient means to provide financial support when it is most needed, allowing companies and households to maintain their income and operations after major catastrophes,” according to Ferguson’s planned comments. “Strong partnerships can narrow the gap between economic and insured losses in case of natural disasters, stabilizing government finances and providing immediate relief to victims.”
Hess’ comments will highlight the fact that 2006 appears set to be an excellent year for insurance, with few catastrophe losses, double-digit profits and renewed investor interest in insurance stocks. “For non-life insurance, 2007 is likely to be another very profitable year.” Hess will will also noted that the “key to sustaining these attractive profits will be for the insurance industry to remain disciplined towards competition and pricing.”
The full report and other analysis from Swiss Re’s Forum may be obtained on the Group’s web site at: www.swissre.com.
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