Emerging markets account for around 86 percent of the world's population and 40 percent of global gross domestic product (GDP). But according to data for 2015, they are under-represented in insurance with a combined share of 18 percent of global premiums.
The rise of emerging markets in the past decades has brought to the forefront large markets, in particular Brazil, Russia, India, China and South Africa (BRICS). The BRICS countries account for over half of emerging market output, and 69 percent of emerging market insurance premiums. These, and other more established emerging markets, will remain major contributors to global insurance growth, according to forecasts by Swiss Re Economic Research & Consulting.
Of late, there has been increasing focus on some smaller and less well-developed emerging markets known as the "frontier" emerging markets. For the purposes of this sigma and from the insurance sector perspective, the frontier markets are typically those emerging countries with smaller-sized economies, lower income levels and insurance sectors in the early stages of development. Another important characteristic is a favorable insurance premium growth outlook, driven by strong fundamentals, impending regulatory changes and the influence of some external trends. Most frontier markets are in Sub-Saharan Africa (SSA). Others are in the Commonwealth of Independent States (CIS), Southeast Asia and the Middle East. Generally speaking, annual growth in real GDP in these countries is forecast to be strong (5 percent to 10 percent) in the near future, and total insurance penetration rates are low (less than 1.5 percent currently).
