Global insurance market report [gimar]

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Figure 3.3i:
Germany unit-linked premiums, DAX 30 average (EUR million, 2000–2018)
Sources: BaFin, Thomson Reuters,
82
 authors’ calculations
Figure 3.3j:
Italy unit-linked premiums, FTSE-MIB average (EUR million, 2004–2018)
Sources: IVASS, Thomson Reuters,
83
 authors’ calculations

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This relationship is understandable given that 
rising equity markets would make unit-linked 
products more attractive to policyholders. 
As equity markets have grown, interest rates 
have fallen. In general, this would reduce the 
guarantees that insurers could offer on non-linked
products, making those products less attractive. 
Other than France, the correlation with interest 
rates is quite strong in Europe, and it appears 
that both interest rates and equity markets are 
affecting premiums for unit-linked business.
The US had a noticeable increase in annuity 
premiums in 2018, with direct written premiums 
up 12.4% and fixed annuities contributing the 
most growth. As seen in the UK, there is not 
much of a correlation between annuity direct 
written premiums and the S&P 500 in the US 
(see Figure 3.3k). The US has not experienced 
the consistent correlation observed in Germany, 
France and Italy. Premiums in 2016 and 2017 
were noticeably lower than 2015 levels. The US 
Department of Labor’s proposed fiduciary rule 
may have accounted for the decrease in 2016 
and 2017.
Under the fiduciary rule, financial advisers who 
handle retirement accounts must act in the best 
interests of their clients and charge compensation 
considered to be “reasonable”. They must also 
disclose this compensation to their clients. The 
vast majority of annuities are sold on commission, 
which largely explains why many advisers have 
moved away from annuity sales due to the 
uncertainty around the rules on compensation.
Figure 3.3k:
US annuity direct written premiums vs S&P 500 (USD billion, 2009–2018)
DWP = direct written premiums
Source: NAIC

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