Global insurance market report [gimar]

2.2 LIFE INSURANCE
The Swiss Re Institute’s Global Economic and 
Insurance Outlook 2020 calculates a 1.6% 
increase in real terms in the global life insurance 
market throughout 2018. This growth is slightly 
lower than in previous periods, mainly as a result 
of a life premiums contraction in China. However, 
life insurance premiums in emerging markets are 
expected to increase by 9% in 2019–20, with 
those in advanced economies remaining stable.
Given the low interest rate environment, the 
life insurance market will struggle to retain 
profitability. Traditional life products with fixed 
guaranteed rates may remain unattractive 
and policyholders may direct their savings to 
other markets and risk profiles, even though 
the opposite trend is being observed in some 
jurisdictions, such as Italy and France.
Life insurers may respond to these challenges by 
innovating under the current regulatory regime 
or offering products with lower or no guaranteed 
benefits at all. As discussed in Chapter 1 and in 
the 2018 GIMAR, life insurers will need to prepare 
to operate in a low-for-long environment and 
protect themselves against interest rate spikes 
that could lead to lapses and surrenders. Given 
the current macroeconomic environment, a shift 
towards riskier investments, such as equities, real 
estate and collateralised assets, may need to be
monitoried by insurance supervisors.
Supervisors track the difference between net 
investment yields and guaranteed crediting 
rates for the life industry. In the US, the margin 
widened last year, with the overall net spread 
(the difference between the portfolio rate and the 
guaranteed rate) increasing from 93 basis points 
in 2017 to 110 basis points in 2018.
Figure 2.2a:
US life insurance market net spreads
19
(2006–2018)
Source: NAIC

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