In 2005, the worldwide insurance industry wrote premiums to the tune of $3,426 billion according to a Swiss Re study. Last year, life insurance grew by 3.9% and non-life by 0.6%. The 2003/04 trend towards improved capitalization and profitability continued in 2005 in both life and non-life insurance, the company says.

Insurance premiums amounted to a total of $3,426 billion in 2005, which is 7.7% of worldwide economic value creation (GDP). $1,974 billion came from life and $1,452 billion from non-life insurance policies.

Industrialized and emerging markets differed markedly in premium and growth terms: the industrialized countries generated over four fifths of world premiums, or $2,999 billion, but grew by only 1.9%. Meanwhile, the emerging markets benefited from their hardening currencies and generated $427 billion in premiums, attaining a growth rate of 6.9%. South and east Asia reported particularly strong growth of 9.5%.

Looking at insurance spending, people in industrialized countries spent about 9% of GDP on life and non-life protection. In the emerging markets, the respective shares ranged from 1.4% in the Middle East and central Asia to 5% in south and east Asia, Swiss Re’s study found.

Life and non-life sectors showed entirely different developments: in life insurance, the trends towards increasing life expectancy and governments shifting social security over to private systems were the main growth drivers. In 2005, life insurers sold considerably more annuity products than in the previous years. They benefited from favorable stock markets, which fuelled unit-linked policies sales.

Swiss Re adds that the growing loan market generated more mortgage-related life insurance policies. Life insurers’ profitability and their financial strength improved.

The firm forecasts that premium growth in life insurance is expected to continue in 2006, given the favorable tax, demographic and financial market environment. In the US, non-life price increases will support premium growth, especially in lines of business affected by the large hurricane losses.

In other industrialized countries, easing prices should lead to a slight premium decrease, the report claims. Emerging markets are expected to continue on their growth path. Barring large catastrophes or stock market turmoil, profitability is expected to improve further in both the life and non-life sectors.