Reinsurance, also known as insurance for insurers or stop-loss insurance, is the practice of insurers transferring portions of risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim. The party that diversifies its insurance portfolio is known as the ceding party. The party that accepts a portion of the potential obligation in exchange for a share of the insurance premium is known as the reinsurer. Reinsurance allows insurers to remain solvent by recovering some or all of amounts paid to claimants. It also provides ceding companies the capacity to increase their underwriting capabilities in terms of the number and size of risks.
Technavio, a leading global technology research and advisory company has published a new reinsurance market research report on the outlook of the Global Reinsurance Market from 2018 to 2022. This latest research on the Global Reinsurance Market focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimise their market positions. The report predicts that the increasing awareness of insurance products in emerging markets will be one of the major factors driving the growth of the Global Reinsurance Market.
The objectives of this report seek to provide actionable intelligence alongside the market size of various segments; to detail the major factors influencing the market; to determine the geographical breakdown of the market in terms of detailed analysis and impact; to analyse business dimensions with an eye on individual growth trends and contribution of upcoming market segments; and finally to track the competitive landscape of the Reinsurance Market.
MARKET SEGMENT AND KEY REINSURERS
The Reinsurance Market is segmented based on component, platform, industry vertical, and geography. On the basis of component, the market is divided by size, share, trend and growth. This is due to the presence of a number of companies who offer reinsurance policies for both life and non-life sectors and is quite competitive. By offering a detailed analysis of the market’s competitive landscape and with information on the products offered by companies, this reinsurance industry analysis report by Technavio aids reinsurers identify new upcoming growth opportunities across various regions, and design new growth strategies. An in-depth survey of key players in the Reinsurance Market which is based on the various objectives of an organization such as profiling, the product outline, the quantity of production, required raw materials, and the financial health of the organizations are all considered.
The market segment by Regions covers North America (United States, Canada and Mexico), South America (Brazil, Argentina, and Colombia), Europe (Germany, France, UK, Russia and Italy), Asia-Pacific (China, Japan, Korea, India and Southeast Asia), Middle East and Africa (Saudi Arabia, UAE, Egypt, Nigeria and South Africa). The report predicts that the Americas will account for the major growth of the Reinsurance Market throughout the predicted period between 2018 and 2022. The Americas were the leading region for the global Reinsurance Market in 2017, accounting for a market share of nearly 48%.
However, the companies that are covered by the report are Munich Re, Swiss Re, Hannover Re, SCOR SE, Lloyd, Berkshire Hathaway, Great-West Lifeco, RGA, China RE, Korean Re, Partner Re, GIC Re, Mapfre, Alleghany, Everest Re, XL Catlin, Maiden Re, Fairfax, AXIS, Mitsui Sumitomo, Sompo, and Tokio Marine.
Over the five years to 2018, investment income was maligned by low interest rate as well as volatile equity and commodity markets. Additionally, premium growth was hindered by a soft cycle in premium prices. The soft premium price cycle coupled with lower investment income has led industry profitability to decline from 16.1% in 2013 to 10.5% in 2018. Most reinsurers began the period with substantial amount of reserves which enabled them to endure the soft market, low investment yields and currency headwinds. Largely driven by a rebound in 2014 of 11.8%, industry revenue is projected to increase at an annualised rate of 2.7% during the first five year period to USD234.8 billion, with growth of 1.8% in 2018 alone.
Base on Technavio’s market research report, the Reinsurance Market will register a revenue of close to USD 750 billion by 2022. This industry research report provides a detailed analysis of the market by products which are Life and Non-life reinsurance. In 2017, the non-life segment held the largest market share accounting for nearly 73% of the market. The market share for this product is expected to increase nearly 3% by 2022. Life reinsurance caters to insurance for life and health. Life insurance is the protection provided for the loss of capital or income that would take place in case the earner or insured dies. The earner or insured buys the insurance to protect his or her family from the prospect of sudden monetary loss caused by his or her death. Owing to the increasing awareness of insurance products, there will be a sizable demand for life and non-life reinsurance products. According to the market research experts, the non-life segment will account for the maximum share of the Reinsurance Market size throughout the next few years.
The analysis of the report also forecast the Global Reinsurance Market to grow at a Compound Annual Growth Rate (CAGR) of 4.1% between the period 2018 and 2022. The report covers the present scenario and the growth prospects of the Global Reinsurance Market within this period. To calculate the market size, the report considers the revenue generated from the sales of life and non-life insurance products.
By 2022, the Americas are expected to continue dominating the Reinsurance Market and register the highest growth of nearly 2%. Because of strict government regulations with insurance, be it life and health, property and casualty, or a specialty such as marine and aviation, individuals and organisations proactively buy insurance in these regions. The insurance markets are saturated in the developed countries since there is a high awareness of insurance. Increase in purchase of insurance products will subsequently drive the growth of the Reinsurance Market.
In developing and emerging economies, the insurance market has been growing sluggishly in the past as neither the people were aware nor did government regulations insisted on the importance of insurance products. However, now there is an increased awareness of the importance of insurance, and hence, the market for both insurance and reinsurance will grow. Countries such as Brazil, Argentina, India, and Nauru are developing at a rapid pace and the people are becoming aware of the importance of keeping their lives and properties insured. This trend is expected to further drive the market during the forecast period. With the increasing awareness about the importance of insurance in the developing and emerging markets, the demand for insurance products will grow in these countries and subsequently drive the growth of the Reinsurance Market.
ROLE OF TECHNOLOGY
The advances in technology are driving the whole market to accomplish the fourth industrial revolution. The appropriate use of technology could result in the effective management of the various verticals of the insurance businesses which would ensure increased profits and customer appreciation. For example, the right use of blockchain technology may result in efficient and secure paperwork which will assure customers of the safety of their credentials and classified data. Nevertheless, the high designing and manufacturing cost of technology is seen to restrain the Reinsurance Market growth.
According to this research, one of the major drivers for the Reinsurance Market is the complex macroeconomic conditions worldwide. The insurance market is dependent on different forces of the economy. Insurance companies earn revenue by investing the premium payments in different portfolios such as real estate, stocks, mortgage-backed securities, and government bonds.
However, one of the major challenges that might hinder the growth of the Reinsurance Market is the vulnerability to cybercrimes. The incidences of cybercrime include hacking of computers and in-house software as well as intrusion into the intranet portals. The reinsurance industry can be affected by the misappropriation of data on the device or the cloud and then sell the client’s confidential information to competitors.
It is clear that the Global Reinsurance Markets are surging like never before. The major boom in the market is evident as every segment of the reinsurance industry is growing at a rapid pace with the market expanding both in value and volume over the last decade and is expected to continue this trend into the future years as well. Insurers and reinsurers should position themselves and take advantage of this expected growth.
Writer: Gideon Sarfo
Email Address: email@example.com
Place of work: Tri-Star Insurance Services Gh. Ltd.