Liability risks, emerging markets point to solid commercial insurance growth

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Liability insurance and emerging markets continue to shape the international commercial marketplace pointing toward a growth faster than the economy.

A Swiss Re study shows that commercial insurance premiums in emerging markets grew an average of 14% per year in 2010, over 200% jump from the 5.4% growth of advanced markets.

China led the pack at 32% annual growth in the same period after the introduction of mandatory auto liability insurance in the country.

"Commercial insurance in high-growth markets such as China benefits not only from an expanding economy, but also from increasing penetration, so premiums tend to grow faster than the economy," says Kurt Karl, Chief Economist of Swiss Re.

The United States remains the largest commercial insurance market in the world at $237 billion premiums followed by Japan at $35 billion. China occupied the third spot at $31 billion in premiums. Without the mandatory auto liability insurance, the country would rank seventh globally.

Risk Landscape Spurs Growth in Liability Insurance

Liability insurance is also on the rise, growing faster than GDP and property insurance.

"The growth of the services sector, which is more exposed to liability risks than the manufacturing sector, is one reason for the increasing importance of liability protection,” says Swiss Reco-author Thomas Holzheu.

Property lines accounted for 29% of direct commercial insurance premiums written in the United States and 50% in Brazil. However, it accounted for only 13% of the premiums in China.

Liability Insurance in UK Also on the Rise

In a separate study by Research and Markets, liability insurance premiums posted a compound growth in the United Kingdom.

The public and product liability category grew by 8.8% in the four-year course of the study that started in 2009.

The strengthening economy, an increase in the number of private-sector businesses and a pick-up in retail and manufacturers' product sales have all contributed to the country’s £2.9 billion premium growth in 2013.

The United Kingdom is the fourth largest international commercial insurance market at $28.3 billion according to the Swiss Re study.

 

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