As of the end of 2014 the worldwide property insurance market was worth $360.5 billion in gross written premiums with household (homeowners’) policies making up 54 percent of this total, according to a survey conducted by U.K. Based consultants Finaccord.
The survey also found that this global market size has “risen at a nominal compound annual growth rate of 4.7 percent since 2010, when premiums were worth $300.0 billion, though this growth rate was 2.9 percent in real terms (adjusting for inflation).”
The break down in the worldwide market value broke down as “$195.8 billion (54 percent of the total) in personal property insurance premiums (i.e. household or homeowners’ policies bought by individual consumers) and $164.6 billion (46 percent) in commercial property insurance premiums (i.e. policies bought by corporate, business, public sector and not-for-profit customers including crop insurance).”
David Parry, Managing Consultant at Finaccord, commented: “At a respective $150.1 billion, $22.6 billion and $22.2 billion in gross written premiums, the US, France and Germany were the world’s largest property insurance markets in 2014.”
He added that “in nominal terms, and across the 40 major markets analyzed in depth by Finaccord, the markets that grew most rapidly between 2010 and 2014 were those of Argentina, Turkey and the Philippines with compound annual growth rates of 29.6 percent, 17.8 percent and 16.3 percent, respectively. However, once national inflation rates have been accounted for, the fastest-growing markets were those of the Philippines, Thailand and China with respective real compound annual growth rates of 13.1 percent, 11.3 percent and 11.1 percent.”
The report also notes that “the composition of property insurance markets between personal and commercial business (as defined above) varies substantially between different countries. In 2014, household / homeowners’ insurance premiums accounted for the highest proportion of the total market in Australia at 69.1 percent while they were lowest in China at just 4.2 percent.
“For Australia, this was because it has a relatively high rate of household/homeowners’ insurance penetration while exactly the opposite was true for China, which also has a very large agricultural insurance sector; in fact, it is generally the case that less mature insurance markets are the ones in which commercial property cover is dominant.
“Furthermore, between 2010 and 2014, household/homeowners’ insurance premiums increased as a proportion of the total in 21 of the 40 countries investigated with commercial property insurance premiums in the ascendancy in ten and with no change in the relative proportions in nine.”
Parry also explained that at the “global level, household insurance policies may be outpacing commercial property cover for several reasons. These include the emergence of increasingly effective distribution channels for marketing household cover to individual consumers, such as bancassurance and online sales, plus soft market conditions for commercial property insurance in many parts of the world.”
Finaccord also said that its “research indicates that the global property insurance market is likely to increase at slightly slower nominal and real compound annual growth rates between 2014 and 2018 than it did between 2010 and 2014 with the result that it will reach a value of around $421.2 billion by 2018, which converts to $393.5 billion when deflated in line with forecast inflation rates.”
Parry added that in real terms, “we expect the property insurance markets of the Philippines, Thailand and Indonesia to expand most rapidly up to 2018. Moreover, we expect household insurance to continue outgrowing commercial property insurance with the result that it will have risen to more than 55 percent of the global market by 2018 with almost a half of its value in that year due to the US alone.”
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