For years now, the life insurance market here in the U.S. has been suffering from diminished returns due to low interest rates. The effect is, according to some, much worse across the pond, however.
Recent news from Linklaters, a global law firm with an insurance specialization, says that the “current climate has produced a perfect storm for the life insurance industry,” with 70 percent of Europe’s largest insurers confirming that profitability has suffered significantly as a result of low yields.
Even more frightening, the report claims that there is no end in sight. Seventy-two percent of those surveyed by Linklaters predict that the low yeild environment will persist over the next three years.
“With the economic situation in Europe still uncertain and historically low yields likely to persist in the medium-term, European life insurers are feeling the pain,” said Victoria Sander, global insurance sector co-leader at Linklaters. “We are already seeing firms looking outside Europe’s established markets for profitability — seeking higher returns in Turkey, Asia, Africa and Latin America. This could leave a hole in the market closer to home.”