Growth opportunities for global insurers

EY is reporting that global insurance companies  are looking beyond the BRIC countries for growth.

EY’s Waves of Change: says “China will continue to play an dominant role in driving premium growth in international markets but new emergers such as Mexico, Thailand, Colombia and Indonesia are offering valuable long-term opportunities.”

Shaun Crawford, EY’s global insurance leader, said in a release: 

“The overall contribution of rapid-growth markets to insurance premium growth will continue to be very significant. Some of the larger economies, such as Brazil, Russia, India and China (BRIC), appear to have entered a period of slower growth but they continue to possess high, long-term potential. 

“And new waves of market liberalization and rapid consumer adoption of new technologies are opening additional markets such as Mexico and Thailand to non-domestic firms. However, each market has its own distinct risk profile. Insurers will need to model the risks across all the geographies to clearly evaluate the drivers for growth and pick their targets carefully.” 

According to EY’s matrix, China, Mexico and Thailand will offer the best risk versus opportunity potential for insurers between now and 2020. China, despite a recent modest slowdown, continues to boast extraordinary income growth that spurs auto and home ownership. In addition, an aging population will drive the development of life and health markets. 

Mexico has also undergone a period of extensive liberalization, opening its market to foreign insurers. On some measures, Mexico is the most open insurance market in the study. Yet the pace and unpredictability of regulatory change can be risky for investors. 

Brazil and India remain important opportunities given the size of the markets despite recent slowing growth. 

India is second only to China in terms of absolute forecast growth in insurance premiums. Yet the regulatory environment has proved extremely challenging for investors. 

In addition, a large current-account deficit and reliance on portfolio-capital inflows elevate liquidity risks. 

Brazil is third, behind China and India, in terms of market size. Following a program of liberalization, Brazil is the most accessible of the BRICs for foreign insurance companies. 

Indonesia offers an extremely strong economic growth picture – second only to China and Vietnam in EY’s Rapid-growth markets forecast. However, it is challenging to obtain licenses, so acquisition is the main entry route. 

Colombia is also a notable market that ranks relatively high in opportunity and only moderately on the risk scale.