Investment income will pick up as global investor confidence in the five years to 2018
Los Angeles, California (PRWEB) July 04, 2013
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 Direct 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 disasters and medical malpractice. “General insurers derive income from both insurance premiums and the investment of premiums in bonds, stocks and other asset classes,” according to IBISWorld analyst Doug Kelly. 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.
The past five years have been characterized by the Global Direct General Insurance industry's shift toward emerging markets to drive its growth out of the recession. From 2008 to 2013, IBISWorld estimates that industry revenue grew at a 2.1% average annual rate to about $2.1 trillion in 2013. “Growth has been primarily driven by growing wealth and economic development in emerging markets, particularly in Northern Asia,” says Kelly. Many of these emerging markets experienced annualized premium growth in the high single digits, but the worldwide recession and its lingering effects have kept premium growth weak in most mature markets and contracting in Europe. High natural disaster losses in 2011 and 2012 have begun to soak up some of the industry's excess capacity and resulted in some price hardening in mature markets. Consequently, prices increased toward the end of 2011 and into 2012, suggesting the industry may be in the early stages of a hardening market. As a result, IBISWorld forecasts emerging market growth and slight price increases in the United States and Europe will increase industry revenue 2.3% in 2013.
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. 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.
The Global Direct Insurance Carriers industry exhibits a low level of concentration, but concentration levels 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, a niche market in the context of this industry. Other competitors may concentrate on a country or region, but globally their share is low. Given that the industry’s major players are already highly globalized, with the exception being the North American based State Farm, the likelihood of a significant 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 the Global Direct General Insurance Carriers 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.
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