Investment income will pick up as global investor confidence in the five years to 2017
Los Angeles, CA (PRWEB) October 24, 2012
Insurance coverage brings peace of mind to citizens and businesses all over the world by shielding them from a range of unpredictable events. The Global General Insurance Carriers industry provides protection against the costs arising from a variety of property and casualty (P&C) events, such as auto accidents, natural catastrophes and medical malpractice. General insurers derive income from both insurance premiums and the investment of premiums in bonds, stocks and other asset classes. Most premiums are derived from the renewal of existing policies. Policy pricing tends to cycle from price cutting (softening) to price increasing (hardening). Generally, a hard market will lead to higher P&C premiums from one year to the next, without a change in risk coverage.
After suffering two consecutive years of contraction amid the global economic downturn, the industry returned to growth in 2010. In the five years through 2012, industry revenue declined at an annualized rate of 2.2% as investment income plummeted and premium prices softened. In 2012, industry revenue will grow about 2.8% to $1.6 trillion, down from $1.8 trillion in 2007. Starting in 2010, the industry saw more insurance sales, causing premium income to rise, along with greater investment income streams through recovery in financial markets and asset prices. Industry profit margins also edged closer to traditional levels as wage expenses and benefit payments made to claimants declined. “IBISWorld estimates that profit for the industry will reach 11.8% of revenue through 2012 after averaging just 8.4% for the past five years,” says IBISWorld industry analyst Nima Samadi. The next five years will feature strong revenue gains. Demand for insurance will grow, hardening premium prices, and investment income will pick up as investor confidence returns to global markets. Industry revenue is forecast to grow strongly during the next five years. Insurers will also see a healthy bottom line and an increase in their assets. Underpinning these results will be more stringent risk management techniques in response to the global recession that characterized the past five years.
The Global Direct Insurance Carriers industry exhibits a low level of concentration with the top four industry participants accounting for 12.9% of global industry revenue. A top four share below 40.0% is considered low. Importantly, no player commands an industry share of greater than 5.0%. Nonetheless, concentration levels do vary by region, country and product line. Many industry participants specialize in a particular segment, for instance AMBAC specializes in credit insurance on municipal bonds, which is a niche market in the context of this industry. According to Samadi, other competitors may concentrate on a country or region, but globally their share is low. Given that the major players are already highly globalized with the exception being the North American based State Farm, the likelihood of a material increase in concentration is unlikely even when accounting for prospective mergers and acquisitions that may take place over the coming five years. For more information, visit IBISWorld’s Global Direct General Insurance Carriers industry report page.
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IBISWorld industry Report Key Topics
Businesses in this industry initially underwrite insurance policies relating to property, casualty, liability and other general risks. In underwriting insurance policies, general insurers earn premiums that they then invest to generate additional income. The underwriting of life, disability, health and medical insurance represents a separate industry, although many businesses compete in both insurance markets.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
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