Alianz

AllianzGlobalInsuranceReport2025:Rising

demandforprotection

27May2025

AllianzResearch

2

AllianzResearch

Content

4

ExecutiveSummary

13

Lookingback:Stellargrowth

18

Thechangingrisklandscape

22

Lookingahead:Therisingneedforprotection

26

Thenextfrontier:AdvancingSDGs

28

Appendix

3

27May2025

Executive

Summary

ArneHolzhausen

HeadofInsurance,Wealth&ESGResearch

arne.holzhausen@

MichaelaGrimm

SeniorEconomist,

Demography&SocialProtection

michaela.grimm@

PatrickHoffmann

Economist,ESG&AI

patrick.hoffmann

@

A

PatriciaPelayo-Romero

SeniorEconomist,Insurance&ESG

patricia.pelayo-romero@

KathrinStoffel

Economist,Insurance&Wealth

kathrin.stoffel

@

?Theglobalinsuranceindustrygrewbyanestimated+8.6%in2024,surpassingthepreviousyear‘srecordgrowthof+8.2%andaddingamassiveEUR557bntotheglobalpremiumpool.Intotal,insurersworldwidecollectedEUR7.0trninlife,P&Candhealthinsurancepremiums.

?Insurancepenetration(premiumsasapercentageofGDP)alsorosefrom7.1%in2022to7.4%in2024.However,thisisroughlythesamelevelastenyears

ago.WhilehealthinsurancehasincreaseditsrelevanceoverthepastdecadeandP&Chasmanagedtodefenditsturf,lifeinsurancehasfallenquitesharply,andisstillrecoveringfromtheperiodofultra-lowinterestrates.

?TheglobalP&Csegmentgrewby+7.7%lastyear,slightlylessthanthepreviousyear(+8.3%).Moreremarkably,growthwasmainlydrivenbythelargest

market,NorthAmerica,wherepremiumincomeincreasedby+8.2%.While

premiumincomeinWesternEuropeincreasedby+6.0%,theAsianP&Cmarketwaslessdynamic,growingbyonly+4.0%.Asaresult,itisstillsmallerthanitsWesternEuropeancounterpart,despitethefactthatmorethansixtimesas

manypeopleliveinthisregionasinWesternEurope.ThisistrueevenifJapanandChinaareincluded.Theterm?growthmarkets“l(fā)osesitslusterwhenNorthAmericaeasilyoutstripsAsia.

?Thelifesegmentgrewby+10.4%in2024,fasterthantheothertwosegmentsandalsofasterthanin2023(+8.2%).ThemaindriverwasonceagainNorthAmerica,whichgrewbyanastonishing14.4%:Asinterestratesreachednewhighs,manyUShouseholdsrushedtolockintheseratesfortheirannuities.HigherinterestratesalsoliftedpremiumincomeinWesternEurope(+7.1%).InAsiamostmarketspostedstronggains,ledbyChinawithagrowthrateof

+15.4%.

?Inthehealthsegment,USdominanceisverypronounced:TheUSmarket

accountsforaroundtwo-thirdsofglobalpremiumincome,whichincreased

by+7.0%in2024.DemandforhealthinsuranceremainsverystronginAsia,

withgrowthof+12.6%in2024.Thisalsoreflectsthestilllowpenetrationintheregion,whichisbelow1%inallmarketsexceptTaiwan.Evenmorethaninlifeinsurance,demandismainlydrivenbythestatusofthesocialsecuritysystem,i.e.thecoverageandqualityofthepublichealthcaresystem.

?In2025,globalGDPgrowthisexpectedtoslumptoamere+2.3%,thelowestlevelsincetheCovid-19pandemic.ThemainculpritistheUStradewar,

drivingthelevelofglobaluncertaintyashighasitwasduringthepandemic.Moreover,inflationdynamicswilldivergebetweentheUS(pickingupduetotariffshikes)andtheEurozone(furtherrecedinginflationpressures).

?Thecapitalmarketnarrativehasreversedsharplysince?LiberationDay“:

InvestorsappeartohaveturnedawayfromUSassets,withthedollar

depreciating,severalUSequityindicesincorrectionorevenbearmarket

territoryandUSinterestratesrising.TherecentturmoilcanbeseenasafurtherstepintheerosionoftheUSdollar‘sroleasaninternationalreservecurrency,leadingtomorefragmentedandlessefficientglobalfinancialsystems.

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?Geopoliticaluncertaintiesandtradetensionsmayweighoninsurancevolumesthroughweakereconomicgrowth,tradeslowingdownandhighercreditandmarketrisks.Ontheotherhand,aprotectioneffectcouldalsobevisibleas

companiesdemandmoreriskmanagementsolutionsinthisuncertainand

crisis-riddenenvironment.Inthelongerterm,financialfragmentationand

weakeninginternationalcooperationincludingonclimate,cyberorpandemicpreparednesscouldincreasethecostofinsuringtheserisks.

?OuroutlookforEuropeismoreoptimisticthisyear,especiallyfortheP&C

business.Therearetworeasonsforthis:First,theexpectedboomindefenseandinfrastructureinvestmentshouldhaveapositiveimpactontheinsurancebusiness,too.Second,anincreaseinthenumberofnaturalcatastropheswillleadtohigherpremiums.Sofar,Europeanhouseholdsandbusinessesspendrelativelylittleoninsuranceprotection,withinsurancepenetrationat2.5%;thecomparablefigurefortheUSis4.4%.Thiswill(haveto)changeinthecomingyears;weexpectanincreasebyatleast+0.3ppinthecomingyears,resultinginannualpremiumgrowthof+4.2%.

?Overall,weexpecttheP&Csegmenttogrowby+4.5%peryearuntil2035.

Thesegmentwillpostsolidgrowthratesinalmostallmarkets,astheneed

formoreprotectionisaglobalphenomenon.Wealsoremainconstructiveonlifeinsurance,whichshouldgrowataCAGRof+5.0%overthenextdecade,

benefitingfromhigherinterestrates.ThisshouldboostdemandindevelopedmarketssuchasWesternandNorthAmerica.However,AsiaandChinawill

remainthegrowthenginesforthegloballifebusiness,aspensionsystems

continuetobedevelopedagainstthebackdropofacceleratingdemographicchange.Thesmallestsegment,health,isexpectedtoremainthemostdynamicat+6.7%p.a.Thereisstillalotofpent-updemand,especiallyinAsia.

?Inabsoluteterms,theglobalpremiumpoolwillgrowbyEUR5,319bnoverthenexttenyears.Mostofthisgrowthwillbeinthelifesegment(EUR2,055bn).MorethanhalfofthisadditionalpremiumpoolwillbegeneratedinAsia

(includingChina,EUR1,071bn),morethaninNorthAmerica(EUR416bn)andEurope(EUR351bn)combined.InP&C,around40%oftheadditionalpremiumofEUR1,522bnwillcomefromNorthAmerica.Inhealth,weexpectadditionalpremiumsofEUR1,743bn,themajorityofwhichwillcomefromtheUSmarket.

?InsurancehasastrongimpactontheUNSustainableDevelopmentGoals

(SDGs).Thiscallsforconcertedactionfrombothpolicymakersandindustry

leaderstocapitalizeontheinsurancesector‘suntappedpotentialtosupport

theSDGs.Policymakerscanincentivizeinsurerstoinvestinsustainableprojectsthroughregulatoryframeworks,taxincentivesorpublic-privatepartnerships.Fortheinsuranceindustry,adoptingamoreproactiveapproachbyintegratingresilience-buildingmeasuresandESGprinciplesacrosstheiroperationscouldenhancelong-termprofitabilityandsocietalimpact.

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Lookingback:Stellargrowth

Theglobalinsuranceindustrygrewbyanestimated

+8.6%in2024,surpassingthepreviousyear‘srecord

growthof+8.2%andaddingamassiveEUR557bntotheglobalpremiumpool.TheindustryhasnotgrownasfastsincetheyearsbeforetheGlobalFinancialCrisis(GFC).Intotal,insurersworldwidecollectedEUR7.0trninlife,

P&Candhealthinsurancepremiums.Thelifesegmentremainedthelargest(EUR2,902bn;+EUR273bnin2024),followedbyP&C(EUR2,424bn;+EUR173bn)andhealth(EUR1,682bn;+EUR111bn).

Lastyear‘sstellargrowthisallthemoreremarkable

giventhatglobalinflationfellfrom6.1%(2023)to5.4%(2024).Premiumsreacttoinflationwithatimelag.In

2022,whenglobalinflationsurgedabove8%,premiumgrowthlaggedfarbehind;lastyear,however,premiumsgrewmuchfasterthaninflationandalsooutpaced

nominalGDPgrowth(Figure1).However,thewedge

betweennominalandrealgrowthremainsconsiderable:

Whilethecombinedgrowthin2023and2024willbe

+17.6%innominalterms,realgrowthwillbe+5.2%.(Seealsotheboxontherelationofgeneralandinsurance

inflationattheendofthechapter.)

Insurancepenetration(premiumsasapercentageof

GDP)hasalsorisen,from7.1%in2022to7.4%in2024,

thoughroughlythesamelevelastenyearsago.But

thiscontinuationmasksmajordifferencesbetween

thesegments:Whilehealthinsurancehasincreasedits

relevanceoverthepastdecade(albeitfromalowbase)andP&Chasmanagedtodefenditsturf(notsurprisingly,asmanyP&Cproductsarecompulsory),lifeinsurance

hasfallenquitesharply.Thelifeinsuranceindustryis

stillrecoveringfromtheperiodofultra-lowinterestrates(Figure1).Lookingfurtherback,thedramaticlossof

relevancebecomesevenclearer:20yearsago,globalpenetrationinthelifesegmentwasabove4%.

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Figure1:OutgrowingGDP

Globalgrosswrittenpremiums*andnominalGDPgrowth*(y/y,in%)andglobalgrosswrittenpremiums*as%ofGDPbysegments

12.0

10.0

8.0

6.0

4.0

2.0

0.0

-2.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

20142015201620172018201920202021202220232024

GWP(life,p&candhealth)GDP

1.41.8

2.5

2.5

3.53.1

20142024alifep&cuhealth

*TheconversionintoEURisbasedon2024exchangerates.

Sources:Nationalfinancialsupervisoryauthorities,insuranceassociationsandstatisticaloffices,Axco,LSEGDatastream,AllianzResearch.

Comparingtheaveragegrowthrateofthelastdecadewiththeperformancein2024underlinestheexceptionalnatureofthelastyear:TheglobalCAGR12014-2024

isaround3ppslowerthan2024growth;inWestern

Europe,2024growthistwiceasfastastheaverageofthelastdecade.TheonlyexceptionsareAsia(excludingJapanandChina)2andChina.Here,thelong-term

averageandlastyear‘spremiumgrowthareabout

thesame.InChina,atleast,thisismoreafunctionofpastexcellencethanweakgrowth:at+11.2%in2024,itisanythingbutweak.However,thedifferentpatternsbetweenAsiaandtheadvancedmarketsofEurope

andNorthAmericasuggestsomeconvergence:while

(nominal)growthinthelatterisbeingdrivenbyhigh

inflation,intheformeritisbeingsappedbyrisingtradetensions.TheerainwhichAsiagrewmuchfasterthan

anyothermarketseemstobecomingtoanend.The

term?growthmarkets“haslostitslusterwhenNorth

AmericaeasilyoutstripsAsia.Lookingatthegrowth

rateoftheremainingmarkets(restoftheworld)seemstocontradictthisconclusion.However,muchofthe

highgrowthinthesemarketscanbeexplainedby

turbochargednominalgrowthinhighinflationmarketsinEasternEuropeandLatinAmericasuchasTürkiyeandArgentina.

1CompoundAnnualGrowthRate.

2Inthefollowing,AsiaalwaysreferstotheregionexcludingChinaandJapan.Ifbothcountriesareincluded,wetalkaboutwiderAsia.

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Figure2:Wellabovethelong-termaverage

Grosswrittenpremiumgrowth*,2024andCAGR2014-2024byregionin%

World

NorthAmericaWesternEurope

AsiaexJPN&CHN

RestoftheWorld

CHN

JPN

5.7

8.6

6.2

9.3

3.3

6.6

CAGR2014-20242024

77.026.7

14.6

11121.5

1.1

2.5

0.02.04.06.08.010.012.014.016.0

*TheconversionintoEURisbasedon2024exchangerates.

Sources:Nationalfinancialsupervisoryauthorities,insuranceassociationsandstatisticaloffices,Axco,LSEGDatastream,AllianzResearch.

TheglobalP&Csegmentgrewby+7.7%lastyear,slightlylessthanthepreviousyear(+8.3%).Moreremarkably,

growthwasmainlydrivenbythelargestmarket,NorthAmerica3,wherepremiumincomeincreasedby+8.2%,inlinewiththepreviousyear‘sperformance,asUSinflationprovedtobesticky.(Figure3)

WesternEurope,thesecondlargestmarket,alsoshowedstronggrowthof+6.0%.However,thiswassignificantlylowerthanin2023(+8.9%)asinflationeased

significantly.Inaddition,theperformanceofEuropeanmarketswasratheruneven:whilesomemarketsinthesouthofthecontinentperformedstronglyandachievedalmostdouble-digitgrowth,theScandinavianmarketsandSwitzerlandshowedmoremodestgrowthofaround+2%to+3%.Thelargestmarketswereinbetween,

growingby+5.4%(UK),+7.0%(France)and+7.8%(Germany).

TheAsianP&Cmarketwaslessdynamic,growingby

only+4.0%.Asaresult,itisstillsmallerthanitsWesternEuropeancounterpart,despitethefactthatmorethansixtimesasmanypeopleliveinthisregionasinWesternEurope.ThisistrueevenifJapanandChinaareincluded(Figure3).Thisisalsoreflectedininsurancepenetration:

Itisonly1.4%inAsia(1.1%inChina),but2.5%inWesternEurope–andanevenhigher4.3%inNorthAmerica.

WhileAmericansspendanaverageofEUR3,700onP&Cinsurance,thecomparablefigureinWesternEuropeisEUR1,190–andonlyEUR63inAsia(China:EUR142).

Chinaisbyfarthelargestmarketinthewiderregion,

accountingforalmosteverysecondeurowritten.At+4.9%,itrecordedoneoftheweakergrowthratesinrecentyears–infact,premiumgrowthwasloweronlyduringtheCovid-19pandemic,reflectingthedeflationaryenvironmentinChina.Allotherinsurancemarkets(restoftheworld)recorded

growthof+17.1%intheP&Csegment,drivenbystrong

(largelyinflationary)increasesofaround+24%inEasternEuropeandLatinAmerica.

396%ofP&CpremiumsinNorthAmericaarewrittenintheUS;therestisattributabletoCanada.

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Figure3:NorthAmericapoweringahead

P&Cgrosswrittenpremiumgrowth*andmarketsharebyregion,2024in%

World

NorthAmericaWesternEurope

AsiaexJPN&CHN

RestoftheWorld

CHN

JPN

7.7

8.2

6.0

4.0

17.1

4.9

3.1

0.05.010.015.020.0

7.8

17.2

NorthAmerica

WesternEuropeWiderAsia

RestoftheWorld

20.7

54.3

*TheconversionintoEURisbasedon2024exchangerates.

Sources:Nationalfinancialsupervisoryauthorities,insuranceassociationsandstatisticaloffices,Axco,LSEGDatastream,AllianzResearch.

Thelifesegmentgrewby+10.4%in2024,fasterthan

theothertwosegmentsandalsofasterthanin2023

(+8.2%).ThemaindriverisonceagainNorthAmerica,

whichgrewbyanastonishing+14.4%.Thereasonforthislifeboom?Asinterestratesreachednewhighs,many

UShouseholdsrushedtolockintheseratesfortheirannuities–beforetheFederalReservecutratesagain(Figure4).

ButWesternEuropealsosawahealthyincreasein

lifeinsurancepremiumsof+7.1%(2023:+6.1%).Higher

interestrateshavebeenaboonforthesavingsbusinessaroundtheworld.ButnotallEuropeanmarkets

benefited.Whilesome,suchasFrance,Italyand

Sweden,madeastrongrecoveryandgrewatdouble-

digitratesin2024,others,suchasSwitzerland,remainedinthedoldrums;atleastGermanymanagedtoreturn

topositivegrowth.Asia,ontheotherhand,experienced?only“+7.8%growthin2024,wellbelowtheexpansionofthepreviousyear.However,thisismainlyduetothe

(technical)volatilityoftheSouthKoreanmarket.Mostoftheothermarketspostedstronggains,ledbyChinawithagrowthrateof+15.4%.

Asaresult,Asiaasawholeremainsthelargestlife

insurancemarket,wellaheadofNorthAmericaand

Europe(Figure4).Thisisalsoreflectedininsurance

penetration,whichstandsat4.3%inAsia,drivenby

thepopularityoflifeproductsintheadvancedAsian

marketssuchasSouthKorea,TaiwanandSingapore.

ButChina(2.4%)andIndia(2.7%)alsohavedecent

penetrationrates,onlyslightlylowerthanNorthAmerica(2.8%)andnotfaroffWesternEurope(4.2%).These

relativelyhighfiguresreflectlessdevelopedsocial

securitysystems,whichforceAsianhouseholdstosavemoreindividuallyforretirement.Ontheotherhand,

therelativelylowfiguresinNorthAmerica–despite

therecentpensionboom–canbeexplainedbythe

widespreaduseof401kprogramsforretirementsavings.

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Figure4:Asiakeepsitsedge

Lifegrosswrittenpremiumgrowth*andmarketsharebyregion,2024in%

World

NorthAmericaWesternEurope

AsiaexJPN&CHN

RestoftheWorld

CHN

JPN

10.4

14.4

7.1

7.8

12.6

15.4

2.8

0.05.010.015.020.0

4.2

29.8

NorthAmericaWesternEuropeWiderAsia

RestoftheWorld

29.1

37.0

*TheconversionintoEURisbasedon2024exchangerates.

Sources:Nationalfinancialsupervisoryauthorities,insuranceassociationsandstatisticaloffices,Axco,LSEGDatastream,AllianzResearch.

Inthehealthsegment?,USdominanceisvery

pronounced:TheUSmarketaccountsforaroundtwo-thirdsofglobalpremiumincome(Figure5).Inmany

othermarkets,privatehealthinsuranceisstillanichesegment,albeitaverydynamicone:globalpremiumgrowthaveraged+8.3%p.a.overthelastdecade.

Lastyear‘sslowergrowth(+7.0%)canbeseenasa

normalizationafterrecordyearsinwhichCovid-19

boosteddemandforadditionalhealthprotection.

However,demandforhealthinsuranceremainsverystronginAsia,withgrowthof+12.6%in2024.Thisalso

reflectsthestilllowpenetrationintheregion,whichis

below1%inallmarketsexceptTaiwan.Evenmorethaninlifeinsurance,demandismainlydrivenbythestatusofthesocialsecuritysystem,i.e.thecoverageandqualityofthepublichealthcaresystem.Thisexplainswhyeveninsomedevelopedmarkets,suchastheScandinavian

markets,privatehealthinsuranceisalmostnon-existent.

?Ingeneral,datavisibilityofhealthinsurancepremiumsisstillratherlow.Often,healthpremiumsareincludedinothersegmentsashealthcoverageisseenaspartofotherproductsandnotseparatelyreported;inJapan,forinstance,healthistreatedas“thirdsectorproducts”withinlife.

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Figure5:PostCovid-19normalization

Healthgrosswrittenpremiumgrowth*andmarketsharebyregion,2024in%

World

NorthAmericaWesternEurope

AsiaexJPN&CHN

RestoftheWorld

CHN

JPN

7.0

6.96.1

12.6

12.0

8.2

0.9

0.02.04.06.08.010.012.014.0

4.7

12.8

NorthAmericaWesternEuropeWiderAsia

RestoftheWorld

69.9

12.6

*TheconversionintoEURisbasedon2024exchangerates.

Sources:Nationalfinancialsupervisoryauthorities,insuranceassociationsandstatisticaloffices,Axco,LSEGDatastream,AllianzResearch.

Unlikemanyotherindustrieswheretraditionalmarketsarelosingimportancetonewemergingmarkets,the

globalinsuranceindustryisstilldominatedbythe

US.Infact,overthepastdecade,theNorthAmerican

insurancemarkethasincreaseditsglobalmarketsharefrom44.0%to47.9%.Inotherwords,almosteverysecondeurowrittenininsuranceiswritteninNorthAmerica.

Ontheotherhand,other?old“marketssuchasWesternEurope(-5.6pps)andJapan(-3.4pps)behavedmore

orlessasexpected,losingmarketsharemainlyto

China,whichalmostdoubleditsglobalshareto10.8%.However,thegapwiththeUSmarketisstillhuge:whiletheChinesemarketisalreadytheclearnumbertwo

intermsofpremiumincome(EUR754bnin2024),itisdwarfedbytheUSmarket,whichgeneratesmorethanfourtimesasmuchpremiumincome(EUR3,210bn).

Giventhishugediscrepancy,itdoesnotlookliketheUSdominanceinglobalinsurancewillendanytimesoon(Figure6).

Figure6:USdominance

Totalgrosswrittenpremiums*,2014and2024byregionin%

2024

5.6

4.3

5.1

NorthAmerica

10.87.76.5

9.38.82014

WesternEurope

44.047.9

AsiaexJPN&CHN

CHN

27.822.2

JPN

RestoftheWorld

*TheconversionintoEURisbasedon2024exchangerates.

Sources:Nationalfinancialsupervisoryauthorities,insuranceassociationsandstatisticaloffices,Axco,LSEGDatastream,AllianzResearch.

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However,whenlookingatpremiumgrowthoverthelastdecade,thepictureismorenuanced.Whilethereisa

cleardominanceofNorthAmericainP&CandHealth,accountingfor55%and72%ofadditionalpremiums

respectively,theUSlagsbehindinLife,despitethe

recentgrowthspurt:LessthanathirdoftheadditionalpremiumincomewasgeneratedinNorthAmerica,withwiderAsiatakingbyfarthelargestsliceofthecake.

WesternEurope,ontheotherhand,islosingrelevanceacrosstheboard.Itisnotonlyunabletokeeppace

withtheUSmarket,butalsowithwiderAsia.Another

observation:Althoughthemarketsegmentsarestillvery

differentinabsolutesize–life(EUR2,902bn)ismuch

biggerthanP&C(EUR2,424bn)andalmosttwiceasbigashealth(EUR1,682bn)–theabsoluteincreasesareinasimilarrange.Whilegrowthinlifeinsurancehasuntilrecentlybeenheldbackbylowinterestrates,health

insurancehasbenefitedfromthetraumaticexperienceoftheCovid-19pandemic,whichraisedriskawarenessandhighlightedtheneedforhealthprotection(Figure7).

Figure7:WesternEuropeislosingrelevance

Shareofabsolutepremiumgrowth*byregion,2014-2024in%

10.6

19.5

p&c:

+EUR1,068bn

17.4

52.5

4.9

15.0

health:

+EUR979bn

6.9

73.2

3.4

31.7

life:

+EUR1,107bn

NorthAmerica

WesternEurope

WiderAsia

RestoftheWorld

45.7

19.3

*TheconversionintoEURisbasedon2024exchangerates.

Sources:Nationalfinancialsupervisoryauthorities,insuranceassociationsandstatisticaloffices,Axco,LSEGDatastream,AllianzResearch.

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Generalandinsuranceinflation:apartingofways

Insuranceunderwritingistheartofpredictingfuturepriceincreases.Aslongasinflationwassubdued,thiswasrelativelyeasy,althoughnotinallareas.Medicalinflation,forexample,createdheadachesforyearsashealthcarecostsregularlyrisefasterthanthegeneralpricelevel,thankstomedicalprogress.Anotherchallengewasso-called“socialinflation”,

whichisusuallyusedtodescribethephenomenonthatcompensationpaymentsofallkindshavebeensetmuchmoregenerouslyinrecentyears(especiallyintheUS);thisaffectsanumberofinsurancelines,e.g.MTPLorD&O.Especiallyinthelatter,thiscanleadtopremiumshavingtobe(sharply)increasedandlimitsreduced.Butbesidesthesespecific

segments,thelong-termtrendshowsthatthepriceincreasesininsurancemovedmoreorlessinsyncwithgeneralpriceincreases–andbothwerelow.However,afteryearsofdeflationaryrisks,thesituationchangedinthesummerof2021(Figure8).

Figure8:InsurancevsoverallinflationintheEurozone2004-2024,annualrateofchange,in%

10.0

8.0

6.0

4.0

2.0

0.0

-2.0-4.0-6.0

-8.0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

deltaHICP,all-itemsHICP,insurance

Sources:Eurostat,AllianzResearch.

TheglobaleconomyrecoveredsurprisinglyquicklyfromtheCovid-19shockandinflationintheEurozoneroseback

abovethe2%mark(keyword:supply-chainbottlenecks).Then,thesituationworseneddramaticallywithRussia‘sinvasionofUkraine,whichcausedpricestoskyrocket.Theinsuranceindustrywasnottheonlyonecaughtonthewrongfoot.

Thismeansthatpremiumplanningquicklybecameobsolete.Theconsequencewasawideninggapbetweeninsuranceandgeneralinflation,andasignificantdeteriorationinthecombinedratio.In2022,forexample,EEAnon-lifeinsurers

experiencedadeclineinunderwritingprofitabilitycomparedto2021asclaimsrose+11.3%,whilepremiumsonlysawanincreaseof+6.4%.?InGermany,thecombinedratioinmotorinsurancereached111%in2023.

?“ImpactofInflationontheInsuranceSector”,EIOPA-BoS-23/360,05October2023.

13

Insurershavetoreturntoprofitabilityandpremiumincreasesareinevitablebecauseonlyaprofitableinsurancebusinesscanprovidesustainableandreliableriskprotectioninthelongterm.Whilethegeneralinflationratebegantofallattheendof2022,pricesforinsuranceproductsrosesignificantlyshortlyafterwards(Figure9).Theresultingannualincreaseof+3.7%in2023wasmorethantwiceashighasin2022.InsuranceinflationsurpassedgeneralinflationinSeptember

2023andhascontinuedtodososincethen.In2024,theratemorethandoubledagaincomparedtothepreviousyear,reachinganaverageof8.8%.AlthoughithasfallensignificantlysinceitspeakinNovember2024(+10.2%),aslight

accelerationto+8.8%inMarch2025hasbeenobserved–whilegeneralinflationactuallyfellby10bpsto2.2%.The

leadovergeneralinflationislikelytolastuntilprofitabilityisrestored,i.e.thecombinedratiodropsbelow100%again.DevelopmentsintheGermanmotorinsurancemarket,forexample,aremovingintherightdirection,withthecombinedratioalreadyfallingby5.3ppsto106%in2024.

Figure9:InsurancevsoverallinflationintheEurozonesinceJanuary2020,annualrateofchange,in%

12

10

8

6

4

2

0

-2

2020Jan

2020Mar

2020May

2020Jul

2020Sep

2020Nov

2021Jan

2021Mar

2021May

2021Jul

2021Sep

2021Nov

2022Jan

2022Mar

2022May

2022Jul

2022Sep

2022Nov

2023Jan

2023Mar

2023May

2023Jul

2023Sep

2023Nov

2024Jan

2024Mar

2024May

2024Jul

2024Sep

2024Nov

2025Jan

2025Mar

HICP,all-itemsHICP,insurance

Sources:Eurostat,AllianzResearch.

Fromthecustomer‘spointofview,however,oneadvantageremains:becauseinflationcameassuchasurprise,the

adjustmentswere(andwillbe)madelate(r).Duringtheacutephaseofthecost-of-livingcrisis,buyinginsurancecoverwasoneofthefewthingsthatremainedaffordable.Thesalientfeatureoftheinsuranceconceptthusalsoprovesitsworthintimesofinflation:inthecollective,financialburdenscannotonlybesharedbutalsosmoothedoutovertime.Theinsuranceindustrycannotundoinflationforitscustomers;butitcanactasakindofbuffer,creatingvaluabletimeforadjustment.

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Thechangingrisklandscape

Economicandcapitalmarketoutlook

In2025,globalGDPgrowthwillslumptoamere+2.3%,thelowestlevelsincetheCovid-19pandemic.ThemainculpritistheUStradewar,drivingthelevelofglobal

uncertaintyashighasitwasduringthepandemic.TheUSwillenteramildrecession(cumulativedeclineof

-0.5%Q1-Q3),withaweak+0.8%growthin2025,duetoongoingpolicydisruptions,importtariffhikesand

retaliatorytariffsfromChina.Europewillnotescape

lowergrowthduetohighertraderestrictionsanda

weakerUSeconomy,despitetheGermanfiscalstimulusandhigh