- Estimated to grow by 10% every year till 2030
- Least developed insurance market provides room for double-digit growth
- Post-pandemic higher risk awareness and pent up demand for social protection to aid new business
While Sri Lanka would be among the few markets in Asia to avoid a contraction in its insurance business this year, the industry will make a swift recovery from 2021 and could clock in a 10 percent growth every year on average in the next 10 years to 2030, as the country’s least developed market conditions provide room for faster recovery and higher growth.
According to Allianz Global, Sri Lanka’s growth will also receive a tailwind from the higher risk awareness and the pent up demand for social protection, the two key factors, which will drive the insurance sector growth in Asia in the post-COVID landscape.
Sri Lanka’s insurance market is still one of the least developed in the region, with per capita premiums at EUR 42 in 2019, when the regional average was at EUR 255.
Meanwhile, insurance penetration is at a paltry 1.2 percent of GDP, compared to the regional average of 4.7 percent, Allianz data showed.
Sri Lanka’s insurance market hit a “soft patch” in 2019, with premium growth decelerating to 7.8 percent—9.9 percent for Life and 5.8 percent for Property & Casualty (P&C) segment—after recording a double-digit growth in the four years before that.
“2020 will be even more challenging, although Sri Lanka should be one of the few markets in the region to avoid contraction, albeit by a hair’s breadth: premiums are expected to grow by a meagre 1.7 percent, dragged down by a decline in the P&C segment,” Allianz said in a press communique accompanying its Global Insurance Report
The Allianz group is one of the largest insurers in the world, providing protection for property, life and healthcare, for both personal and corporate clients.
The German-headquartered insurance giant had operations in Sri Lanka via its subsidiary Allianz Insurance Lanka Limited for years but it really cemented its position here after a blockbuster deal, which led to the 100 percent acquisition of the general insurance business of Janashakthi Insurance in 2018, for Rs.16.4 billion.
Allianz Global weighed heavily on the Asian region to drive future insurance growth, as the authors of the report expected the Asian region to make a swift return to normal growth after an estimated 0.7 percent contraction in 2020 and projected an average growth of 8.1 percent every year till 2030, driven by both Life and P&C.
This is nearly twice the rate of growth projected for the global insurance industry for the same period, which is estimated at 4.4 percent.
“Asia was the region first hit by COVID-19; it will also be the region that recovers first,” said Michaela Grimm, Allianz SE economist and co-author of
“Higher risk awareness and pent-up demand for social protection will drive growth in the coming years, with China in the lead: for the next couple of years, we expect double-digit increases in premiums in the Middle Kingdom. Up to 2030, China’s premium pool will grow by a whopping EUR 777 billion – the market size of the UK, France, Germany and Italy combined. China and Asia will emerge even stronger than before from today’s crisis,” she added. .