The U.S., China and Germany were the world’s largest commercial lines markets in 2014, but emerging markets offered much higher growth rates, Finaccord found in a new report.
Broken down, the U.S. generated $266 billion in commercial lines gross written premiums in 2014, China produced $63 billion and market in Germany reached $33.7 billion, according to the report.
That’s a big chunk of the global total. The value of commercial P/C insurance premiums landed at $728.6 billion in 2014, Finaccord’s study found.
The larger picture, being drawn here, however, is commercial premium growth acceleration expected in the years to come, and growth spikes in emerging markets.
Finaccord said that the $728.6 billion figure comes after a nominal compound annual growth rate of 5.1 percent since 2010, when premiums in the sector were worth $596.3 billion. The market research and consulting firm predicts a slightly faster nominal and real compound annual growth rate in the global commercial P/C insurance sector from 2014 through 2018. At that point, Finaccord expects insurance premiums in the space to be worth $895.1 billion, or $824.5 billion after inflation is factored in.
Emerging markets will likely drive some of that accelerated growth. Keep in mind, for example, that gross written premiums experienced compound annual growth rates of 24.5 percent, 18.3 percent, and 16 percent, respectively, in Argentina, Turkey and Thailand from 2010 to 2014.
Without inflation factored in, those numbers reflect the most rapid compound annual growth rates in any market. Once inflation is factored in, then the fastest growing markets from 2010 to 2014 were Thailand, Turkey and the Phillippines, which grew 13.7 percent, 10 percent and 9.5 percent, respectively, Finaccord said.
Emerging markets aren’t the only growth factor, however. Finaccord predicts commercial liability insurance premiums to jump in the next few years at three times the rate of commercial motor, commercial property and commercial MAT premiums. Finaccord Managing Consultant David Parry said that the U.S. will be a big growth driver here.
“This will essentially be a result of liability insurance growth in the U.S., which constitutes more than half of the global commercial liability insurance market,” Parry said in prepared remarks. “While the commercial motor and property insurance markets are stable in the U.S., liability premiums continue to grow strongly, especially for workers’ accident insurance.”