Global Premiums Rose 1% In 2001
Because of stock market turmoil and high claims rates, the global insurance industry attracted $2.4 trillion in premium revenue in 2001, up only 1% from the total for 2000, according to a new report from Swiss Reinsurance Company, Zurich.
The increase is the lowest Swiss Re researchers have recorded since the early 1980s.
Roughly $1.4 trillion of the premium payments were spent on life insurance, Swiss Re researchers estimate.
Adjusted for inflation, non-life insurers reported a 5.4% increase in premium revenue for 2001, but life insurers actually suffered a 1.8% decrease, the researchers write.
The stock market downturn slowed demand for variable life insurance and other equity-based life and annuity products, and that decline was only partly offset by a higher demand for life insurance policies with guaranteed returns and pension provisions, the researchers observe.
Emerging nations showed strong premium growth, but the researchers note that their growth rates were mostly below levels of previous years.
For 2002, the studys authors expect to record increased premium volume, although not at the same levels seen during the 1990s.
“The stock market losses experienced since the middle of 2000 have dampened not only premium growth but also the profitability and capital bases of some life insurers,” the Swiss Re researchers write. “On top of this, interest rates have persisted at historically low levels, and poor economic conditions have prompted write-downs on defaulting credit and corporate bonds. In combination, these factors have led to significant equity losses and weakened life insurers balance sheets.”
Reproduced from National Underwriter Life & Health/Financial Services Edition, December 16, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.