APAC Life Insurance Industry Posts 7 Per Cent Growth In 2021

Life insurance industry in Asia-Pacific region has recorded a 7 per cent growth in 2021, the highest since 2016. This is due to increased insurance awareness, as macroeconomic imbalances highlighted the importance of financial security in the wake of COVID-19 pandemic, says GlobalData, a leading data and analytics company.

As per the report, the life insurance industry’s written premium in the Asia-Pacific region are expected to grow at a compound Annual Growth Rate (CAGR) of 6.5 per cent over 2021–2026 from USD 1.30 trillion in 2021 to USD 1.77 trillion in 2026.

DeblinaMitra, Senior Insurance Analyst at GlobalData, said, “Despite the economic challenges in 2020, the life insurance industry bounced back as the COVID-19 pandemic highlighted the importance of life insurance for financial security. The industry’s growth doubled in 2021 aided by the economic recovery.”

China, Japan, Taiwan, South Korea, and India were the top five regional markets, accounting for 85 per cent of the region’s consolidated written premium during last year. China and India were the major growth drivers with double-digit growth in 2021 and are expected to maintain a CAGR above 7 per cent over 2021-26.

Japan, Taiwan, and South Korea are among the most saturated life insurance markets. These markets are expected to record a CAGR of 4.7 per cent, 3.8 per cent, and 3.1 per cent, respectively, over 2021-26.

Personalisation, mental health, well-being, and environmental, social, and governance (ESG) were some of the key trends witnessed in the Asia-Pacific(APAC) life insurance industry.

Examples of personalisation include the AIA Connect app by AIA Hong Kong, which guides customers in recognising the protection gap with their existing life policies through cloud computing and Artificial Intelligence (AI).

With an increase in cases, mental health’s inclusion in life insurance was a notable development in the last couple of years. For example, Australia-based TAL partnered with virtual healthcare provider Teladoc Health to provide a tailored treatment plan.

Regional insurers including Nippon Life and Dai-ichi Life in Japan, Shinhan Life in South Korea, and Axa and Manulife in Hong Kong increased their ESG compliant investments as part of sustainable practices. These trends are expected to gain strong traction over the next five years.

Mitra concludes, “The life insurance industry in the Asia-Pacific region is expected to maintain steady growth over the next five years, driven by its underpenetrated emerging markets, improvement in the standard of living, and increased insurance awareness. Furthermore, the industry will see major insurtech developments to address demographic challenges and provide personalized insurance.”

Asia Pacific Insurance Industry

According to the Market and Research, the APAC embedded insurance industry is expected to grow steadily in 2022, recording a CAGR of 21.6 per cent during 2022-2029. The insurance revenues in the region will increase from USD 24,127.3 million in 2022 to reach USD 71,855.4 million by 2029.

The Asia Pacific is the largest embedded insurance market. The region is home to one-third of the world’s population and one of the world’s fastest-growing economies. The most significant number of insurance tech firms are emerging in China and India. This is primarily due to a large uninsured population and the strong growth of the financial tech industry.

Insurers and insurance tech firms are widely experimenting with new insurance offerings, distribution models, and technological advancements resulting in innovations.

In the recent four to eight quarters, there has been a significant increase in the number of funds raised by market players in the embedded insurance ecosystem.