According to McKinsey’s upcoming report on global insurance, the insurance market worldwide is struggling to achieve consistent profits. The report further states that the P&C sector witnessed a growth of 9.5%, which was primarily driven by a price hike rather than market growth, leading to affordability issues in the developed markets. However, Asia has emerged as the dominant force in the absorption of embedded insurance and is projected to become $170 billion by 2030.
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Natural disasters remain underinsured despite heavy losses. According to the report, 70% of the global losses between 2016 and 2023 were due to natural disasters, amounting to $260b annually. According to Asia News, public life insurers are becoming more prevalent, with favourable interest rates and renewed growth focus. However, they are still losing relevance as compared to other sectors. They further mentioned sluggish growth initiatives and lack of transparency as the major drivers of this decline.
The Silver Lining
The ageing global population and wealth shifts towards Gen X and retirees provide the insurance industry with growth opportunities. As the so-called silver population will double by 2050, insurers are now expected to cater to the rising demand for retirement solutions. In fact, in Asian nations, innovations like integrated digital services are poised to strengthen customer engagement, with China leading this trend.
The commercial P&C sector has witnessed an annual growth of 8% over the past five years, even though the industry’s average ratio has fallen to 91%. Another major growth opportunity for the insurance sector is addressing the cost gap by designing cost-effective solutions for small and medium enterprises.
