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Insurance Brokerages Could Get a Boost From China
By Donato Paolo Mancini
Jul 21, 2017 9:47 am ET
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Global insurance brokers are dwarfed by insurers themselves in terms of size, but an analyst report suggests a shift toward service-based economies in emerging markets, especially China, will set brokerages toward healthy growth in years to come.
The global insurance brokerage market is projected to hit a value of 54.8 billion dollars in 2021, according to the report released Thursday from market analyst MarketLine. The sector grew at a compound annual growth rate of 7% between 2012 and 2016, MarketLine said, reaching a value of 42.8 billion dollars this year.
By comparison, the world’s 10 largest insurance companies are worth 7.28 trillion dollars in combined assets alone, according to an estimate by Statista.
However, rapid expansion in the Chinese brokerage market, at a rate of 16.2% for the 2012-2016 period, has helped buoy global growth rates for insurance brokers. At present, the U.S. accounts for almost two thirds of global insurance brokerage revenues.
China's insurance company assets
Insurance brokers act on behalf of buyers, differing from insurance agents. Brokers have no authority to issue policies, typically offering risk management, claim reduction strategies and other services.
“Brokerage is nowhere near as prevalent in Asia as it is in North America, but the emerging demand for insurance products based on rising income and economic acceleration of countries within the region has stimulated the sector’s growth there,” said Nicholas Wyatt, project leader for MarketLine. “Nowhere has this been more apparent than in China.”
China has gradually transitioned to an increasingly service economy in recent years, with insurance being an important player in this transformation.
The number of insurance institutions grew from 180 in 2014 to 194 in 2015, according to data by China’s National Statistics Bureau, and the total number of people employed in the sector grew by more than 100,000 over the same period.
Mr. Wyatt cautioned that a deceleration in the growth rate is likely to be present through 2021. But even though declining premium rates might trigger a slump in growth rates, he said, they will remain positive.
The report anticipates global compound annual growth will decrease to 5.1% in the coming years.
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