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1、04Looking back:strong growth17 May 202310After the inflation shock14Looking ahead:dramatic change below the surface Anchor in Allianz Global Insurance Report 2023 Allianz Researchturbulent times 18Insurances role as anchor in turbulent times 2ExecutiveSummaryAllianz ResearchArne HolzhausenHead of In
2、surance,Wealth and T Michaela GrimmSenior EKathrin StoffelExpert Wealth Mwith the participation ofLucas ChakaResearch A Total global insurance premium income amounted to almost EUR5.6trn in 2022.Life remains the largest segment(EUR2.6trn),ahead of p&c(EUR1.8trn)and health(EUR1.1trn).Last year,the pr
3、emium pool grew by EUR259bn or+4.9%against the backdrop of a global inflation rate of 8.6%.However,the three segments fared very differently:While property and casualty(p&c)clocked robust growth of+8.7%,health expanded by a more modest+4.9%,and life insurance market growth was a dismal+2.4%:squeezed
4、 real household incomes took a toll on private savings.The rise in p&c premiums was driven by all regions around the globe.However,with EUR77.5bn(+9.9%),more than half of the global increase in 2022 came from North America alone;with premium income of EUR860bn,the region remains by far the largest m
5、arket worldwide.Asia,too,saw healthy growth of+8.4%last year(+EUR31bn).With total premium income of nearly EUR403bn,the region overtook Europe for the first time(+4.0%or EUR15bn to EUR397bn).Life insurance markets suffered last year,particularly in Western Europe:Premium income declined by almost-3%
6、in 2022(-EUR21bn to EUR740bn).Growth was disappointing in Asia,too,recording a modest increase of+3.6%(+EUR33bn to EUR952bn).As in p&c,North America was the main growth driver in 2022,adding EUR61bn in new premiums(+7.8%to EUR840bn).Americas dominance is even more pronounced in health,where the US m
7、arket accounts for around two-thirds of all premium income worldwide.North America i.e.,the US,which accounts for 94%of the regions premium pool dominated the global insurance market not only in 2022,but over the last decade:More than half of the increase in global premium income in p&c and health w
8、as generated there.In life,the share is still slightly below one-third,while Asia commands the biggest slice of the cake.As a result,the regions global market share rose from an already impressive 39.6%in 2012 to a whopping 43.9%in 2022.This is in sharp contrast to Western Europe,which lost more tha
9、n 6pps to reach 23.8%.The other clear“loser”is Japan(-3.7pps to 5.5%),while China was able to almost double its global share to 11.4%;the rest of Asia stood at 10.1%.In economic terms,navigating an inflationary environment will be the biggest challenge in the coming years.Five structural drivers wil
10、l determine inflation(the Five Ds):demographics,deglobalization,decarbonization,digitalization Patricia Pelayo-RomeroExpert Insurancepatricia.pelayo-317 May 2023and debt.Overall,the five Ds might significantly lift annual inflation by up to 1pp.Despite higher inflation or perhaps precisely because o
11、f it premiums are set to increase by+5.2%p.a.over the next decade,adding EUR4,190bn to the global premium pool.In 2033,premium income will reach EUR4.3trn in life,EUR3.1trn in p&c and EUR2.3trn in health.With EUR1,726bn,most of the increase will be in the life segment.However,annual growth(+4.7%)ove
12、r the next decade is likely to lag well behind general economic growth(+5.2%).Insurance penetration will thus fall by 0.3pps to 2.8%.Asia will remain the growth engine for the global life business,with annual growth(ex.Japan)expected to rise to+7.5%.The region should account for half of absolute pre
13、mium growth(EUR866bn),more than North America(EUR377bn)and Europe(EUR276bn)combined.In the p&c segment,additional premiums will amount to EUR1,282bn by 2033.This represents an annual growth rate of+5.0%,roughly in line with the previous decade(+5.1%)and general economic growth(+5.2%);insurance penet
14、ration will therefore decrease only slightly by 1pp(to 2.0%).As in the life segment,Asia(ex.Japan)is the clear growth champion among the major regions,with an annual rate of+8.1%.In absolute terms,however,the importance of the region is lower than in the life segment:only around 35%of the expected p
15、remium growth(EUR448bn)is attributable to Asia,against EUR357bn in North America and EUR168bn in Europe.In view of the major technological upheavals and new and rising risks,this forecast which suggests continuity may come as a surprise.However,this applies only to the surface of premium growth.The
16、underlying changes are dramatic.Technology will change how insurers operate.Ecosystems,for instance,will play a decisive role in customer access,offering not only individual products but comprehensive solutions for customer needs,be it for mobility,living,travel,wealth or health.Artificial intellige
17、nce opens unimagined possibilities in data analytics and could revolutionize the entire value chain from underwriting to claims handling.Preserving its social relevance and with it its billion-dollar premium pool the industry is facing a fundamental change in its business model:The value proposition
18、 of insurers will evolve,from pure financial compensation to risk management and holistic service offerings to prevent and mitigate risks.This follows an inescapable logic:To close the huge protection gaps in NatCat,cyber,health or pension mobilizing more premiums might not be enough;avoiding risks
19、in the first place will become more and more important.However,this transformation will play out over a long time.In the meantime,insurance can prove their worth in turbulent times of high inflation and low growth.The insurance industry cannot undo inflation,but it can smooth out the impact,acting a
20、s a kind of buffer.Its resilience in terms of liquidity and credit makes it a bellwether for the investments needed to finance the green transition.Insurance is an essential shock absorber as it flattens the curve of the economic cycle.4Allianz Research TThe global insurance industry proved to be re
21、silient in 2022:Insurers worldwide collected more than EUR5.6trn in life,p&c and health insurance premiums,more than ever before.The increase over the previous year amounts to an estimated+4.9%,in line with the average growth rate of the past decade(CAGR1 2012-2022:+5.0%).However,the robust developm
22、ent must be seen against the backdrop of rapidly rising inflation:In the last year alone,the global inflation rate is likely to have doubled from 4.3%to 8.6%.In real terms,therefore,the picture is becoming much gloomier.Moreover,the growth momentum has slowed down considerably compared to the previo
23、us year(+7.1%in 2021)due to the weak development in the life sector.The upshot:For a second year in a row,premium growth trailed behind overall economic growth and insurance penetration(premiums as a percentage of GDP)continued to fall,from 7.1%in 2020 1 Compound Annual Growth Rate.Looking back:stro
24、ng growthto 6.9%in 2021 and 6.6%in 2022.However,the decline of insurance penetration is not just the consequence of sky-high inflation.It must be seen as a longer-term trend albeit with huge differences between the segments.While health insurance increased in relevance over the last decade(albeit fr
25、om a low level)and p&c managed to narrowly defend its turf(not surprisingly as many p&c insurance products are mandatory),life insurance dropped dramatically:first ultra-low interest rates and now squeezed real incomes have taken a toll on private savings(see Figure 1).17 May 20235Figure 2 depicts t
26、he growth dynamic in 2022 by region and line of business.The global market growth in 2022 was primarily fed by the sharp rise in p&c premium income:With an increase of+8.7%,premiums for p&c insurance products written worldwide outpaced health and life insurance market growth(+4.9%and+2.4%,respective
27、ly)by a wide margin.And in contrast to both these sectors Figure 1:Losing relevanceGlobal gross written premiums*and nominal GDP growth*(y/y,in%)and global gross written premiums*as%of GDP by segments*The conversion into EUR is based on 2022 exchange rates.Sources:National financial supervisory auth
28、orities,insurance associations and statistical offices,Axco,Refinitiv Datastream,Allianz Research.Figure 2:Life is a dragGross written premium growth*,2022 by region in%*The conversion into EUR is based on 2022 exchange rates.Japan:Health is part of life(third sector products).Sources:National finan
29、cial supervisory authorities,insurance associations and statistical offices,Axco,Refinitiv Datastream,Allianz Research.-2.00.02.04.06.08.010.012.02012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022GWP(life,p&c and health)3.93.12.22.10.81.30.01.02.03.04.05.06.07.08.020122022lifep&chealthwhere grow
30、th significantly slowed down from+9.3%and+6.5%,respectively,in 2021 the pace of p&c premium growth even accelerated compared to the previous year(+6.4%in 2021).-15.0-10.0-5.00.05.010.015.020.0JPNCHNRest of the WorldAsia ex JPN&CHNWestern EuropeNorth AmericaWorldtotalhealthlifep&c6Allianz ResearchThe
31、 surge in p&c business last year was driven by all regions around the globe.At the top of the list is North America or,more precisely,the US alone:With almost EUR77.5bn,more than half of the worldwide increase in p&c premiums came from there(see Figure 3).In 2022,the US p&c market stood at an estima
32、ted EUR802bn,corresponding to a year-over-year growth of nearly+10%(CAGR 2012-2022:+5.4%)and a global market share of nearly 45%.The US might no longer be the undisputed global hegemon but in the p&c business it still rules the world.According to our projections,insurers in Western Europe wrote+4.0%
33、more p&c business in the region than in the previous year,the highest annual increase since 2017.In absolute terms,the increase amounted to EUR15.3bn only a fraction of the growth seen in the US.In sync with the global development,the pace of premium growth did not only accelerate albeit slightly co
34、mpared to the previous year(+3.9%in 2021)but was also well above the average annual growth during the past decade(CAGR 2012-2022:+2.5%).While premium growth in the continents largest market,Germany(+4.0%),was in line Figure 3:US hegemonyAbsolute premium growth*,2022 by region in EURbn*The conversion
35、 into EUR is based on 2022 exchange rates.Japan:Health is part of life(third sector products).Sources:National financial supervisory authorities,insurance associations and statistical offices,Axco,Refinitiv Datastream,Allianz Research.with the regional average,the development in smaller markets such
36、 as Austria(+6.7%),Greece(+6.5%)and Portugal(+6.4%),for example,was clearly above.Western Europe accounted for around 22%of global premium volume at the end of 2022(EUR397bn).Asias p&c insurance market growth increased significantly from only+1.6%in 2021 to+8.4%last year,surpassing the long-term ave
37、rage(CAGR 2012-2022:+6.7%).The main driver of the return to“normal”Asian growth rates was the recovery of the Chinese market,which added EUR12.2bn in premiums,almost as much as Western Europe.Another EUR16.5bn in additional premiums was written in the rest of Asia(without Japan),underlining the impo
38、rtance of the region for the global insurance industry(see Figure 3).In 2022,Asian p&c premium income amounted to the equivalent of nearly EUR403bn,corresponding to a global market share of just under 22%.Thus,for the first time,the entire region wrote more premiums in p&c than Western Europe.Howeve
39、r,the Asian insurance market is anything but a homogeneous mass.The growth rates are inversely proportionate to the maturity of the individual markets:22.32.512.812.22.8-12.420.95.3-20.615.37.061.077.535.3-1.716.52.4lifep&chealthJPNCHNRest of the WorldWestern EuropeNorth AmericaAsia ex JPN&CHN717 Ma
40、y 2023the more mature a market in terms of the insurance penetration rate and density21,the lower the growth rates tend to be.In the wealthier markets such as Hong Kong(1.4%),Japan(+3.7%)and Singapore(+3.9%),growth in 2022 was in the low single digits.The most dynamic group of countries,on the other
41、 hand,achieved double-digit premium growth across the board:For example,according to our projections,the increases ranged from just under+12%in Malaysia and more than+16%in Indonesia and Sri Lanka to+24%in the Philippines.In terms of volume,the Asian insurance market is still dominated by the two he
42、avyweights China and Japan,which,taken together,account for almost two-thirds of regional p&c premium income.China already overtook Japan in 2010.Last year,when its p&c premium income grew by+7%,Chinas market was almost three times as big as Japans.Taking these two countries out of the equation,mark
43、et growth for the region was+12.8%last year,well above the long-term average of+6.9%over the past decade.All other insurance markets(rest of the world,global market share of 8.3%)recorded growth of around+16%in the p&c segment(CAGR 2012-2022:+7.5%),driven by strong(largely inflation-related)increase
44、s in Eastern Europe(around+35%)and Latin America(more than+23%).These two regions account for just under 24%and a good 36%,respectively,of this group of countries market volume.In the health segment32,the dominance of the US is even more pronounced.Not only was the bulk of new premiums in 2022 writt
45、en in the US but overall,too,the US market accounted for around two-thirds of all premium income worldwide.In many other markets,private health insurance is still a niche segment,albeit a very dynamic one:Global premium growth reached double-digits over the last decade(CAGR+10.1%).In the last three
46、years,Covid-19 fueled demand for additional health protection,not least in the US,where premium income increased by more than+40%(or EUR211bn)in that time span.Life insurance markets suffered last year,particularly in Western Europe.On the old continent,business with life insurance products shrank b
47、y almost-3%year-on-year in 2022(EUR20.6bn).Therefore,its share in global premium income decreased by 1.3pps to 28%.Based on our projections,the regions life premium income came to almost EUR740bn at the end of last year,with around 2 Gross written premiums as percentage of GDP and per capita,respec-
48、tively.3 In general,data visibility of health insurance premiums is still rather low.Often,health premiums are included in other segments as health coverage is seen as part of other products and not separately reported;in Japan,for instance,health is treated as“third sector products”within life.half
49、 of that being underwritten in the two largest markets,the UK and France,alone.Within the region,however,the development was anything but homogeneous.Markets with high shares of single-premium or unit-linked products experienced hefty declines in premiums.While the life insurance market in the UK,fo
50、r instance,is estimated to have grown by almost+5%,premium income in France contracted by close to-3%.Germany also reported a decline of-7%after a minus of 0.4%in the previous year.In the southern part of the continent,Italy(-11%)and Portugal(-22%)recorded sharp declines,while Spain and Greece showe
51、d increases of+4.2%and+2.4%,respectively.Overall,premium growth in 2022 was well below the already relatively weak regional long-term average(CAGR 2012-2022:+1.8%).Besides Western Europe,life insurance market developments disappointed in large parts of Asia.At+3.6%,regional premium growth was way be
52、low the long-term average(CAGR 2012-2022:+4.5%),but at least somewhat better than the global average(+1.9%).As in Western Europe,no uniform pattern was discernible at the country level:On the one hand,both saturated markets such as Hong Kong(-5.5%)and Taiwan(-26%)and countries with a strong need to
53、catch up,such as Indonesia(-7.8%),the Philippines(-0.5%)and Thailand(-2.3%),saw negative growth.On the other hand,both China and Japan,accounting for around 60%of regional premium income,showed positive growth.However,at around+10%,life premiums in Japan grew more than twice as fast as those in the
54、Middle Kingdom.The main driver were so-called“third sector”products,which are health policies sold by life insurers that benefited from elevated demand for health protection in the aftermath of Covid-19.At the end of last year,the regions life insurance market stood at an estimated EUR937bn,correspo
55、nding to a global market share of 36%.Excluding the two largest markets,the region posted a slight decline of-0.4%last year(CAGR 2012-2022:+5.6%).8Allianz ResearchJust like in the p&c business,the lions share of global life premium income was still written in the US last year:The countrys global mar
56、ket share accounted for just under 30%1.7pps more than in 2021.In net terms,it generated all of the increase in last years global premium.At the end of 2022,the US life insurance market stood at an estimated EUR777bn,corresponding to a year-over-year growth of around+8%(CAGR 2012-2022:+2.9%).All oth
57、er insurance markets(rest of the world,global market share of 3.4%)suffered a decline of around-12%in the life segment(CAGR 2012-2022:+1.6%)caused by the sharp slump of premium income in South Africa(-54%)which used to be responsible for almost one-third of premium income in those countries.On the o
58、ther hand,Latin America recorded a strong increase(nearly+12%),accounting for 43%of this group of countries market volume.Overall,insurers wrote EUR259bn more in premiums in 2022 than in the previous year(life:+EUR61bn;p&c:+EUR145bn,health:+EUR53bn).As discussed,North America explains most of the in
59、crease.But the US has played an outsized role in global insurance markets over the last decade,too.In this period,the US insurance market raised its global market share from an already impressive 39.6%to a whopping 43.9%.This is in sharp contrast to Western Europe,which lost more than 6pps to reach
60、23.8%.The other clear“loser”is Japan,while China was able to almost double its global share to 11.4%.However,the US dominance is unlikely to end soon(see Figure 4).Looking at the three segments,the dominance of the US is clear in p&c and particularly in health:In both segments,the US market accounte
61、d for roughly half and three-quarters,respectively,of the increase in global premium income over the last decade.In life,however,the share is less than one-third.In this segment,Asia commands by far the biggest slice of the cake.Western Europe,on the other hand,is losing significance in all three se
62、gments;it not only trails behind the US but also Asia(see Figure 5).Figure 4:Mind the gap(between the US and the rest)Total gross written premiums*,2012 and 2022 by region in%*The conversion into EUR is based on 2022 exchange rates.Sources:National financial supervisory authorities,insurance associa
63、tions and statistical offices,Axco,Refinitiv Datastream,Allianz Research.31.717.349.11.9North AmericaWestern EuropeAsiaRest of theWorldlife:+EUR747bn49.712.127.510.7p&c:+EUR766bnFigure 5:The old continent trails behindShare of absolute premium growth*by region,2012-2022 in%*The conversion into EUR i
64、s based on 2022 exchange rates.Sources:National financial supervisory authorities,insurance associations and statistical offices,Axco,Refinitiv Datastream,Allianz Research.39.830.19.86.09.25.243.923.810.111.45.55.3North AmericaWestern EuropeAsia ex JPN&CHNCHNJPNRest of the World202271.56.917.04.7hea
65、lth:+EUR738bn917 May 2023Decomposition of growthOver the past two decades,premium income for non-life insurance products from private customer business in the Eurozone is estimated to have grown by nearly+70%to just under EUR172bn.In absolute terms,the four largest markets in the region accounted fo
66、r four-fifths of this increase:France(+EUR23.4bn),Germany(+EUR18.2bn),Spain(+EUR10.1bn)and Italy(+EUR4.6bn).The French p&c insurance market also tops the list in terms of relative growth,which more than doubled during this period.Premium growth in Spain was also above-average at almost+95%,while Ger
67、many(just under+55%)and Italy(nearly+26%)were well below the regional average.However,these values only reflect the nominal development.Against the background of galloping inflation,what proportion of market growth has been down to inflation over the past 21 years?For our analysis,we use the inflati
68、on rate for expenses for insurance policies41 recorded by Eurostat as part of the harmonized consumer price index.On average over the long term,insurance inflation in the Eurozone lagged slightly behind the general inflation rate(1.6%vs 2.0%)(see Figure 6).The differences in some years were consider
69、able,ranging from+2.3pps in 2010 to a whopping-7.6pps last year a clear sign that the industry is lagging in passing the inflation shock to its customers.Without taking 2022 into account,the two rates ran in sync with each other(1.7%on average).Contrary to general perception,however,the industry doe
70、s not seem to be driving inflation.On the one hand,the intensity of competition has limited insurers ability to raise prices;on the other hand,productivity increases not least thanks to the many opportunities offered by digitalization have probably reduced the cost pressure on the industry.At the co
71、untry level,no uniform pattern emerges.Unlike in Italy and Germany,where insurance inflation was(slightly)below the overall consumer price index,namely-0.1pp and even 1pp,respectively,it was higher in Spain52(+0.6pp)and France(+0.2pp).Over the period considered,the annual insurance inflation rates a
72、dd up to around 38%in Italy,a good 40%in France and more than 59%in Spain.Germany,with around 19%,pushes the regional average down to nearly 34%.Due to the below-average development in the insurance market,average insurance inflation in Italy was even almost 13pps higher than premium growth itself.I
73、n other words,the Italian retail p&c market has shrunk over the last two decades in real terms.The Spanish insurance market,on the other hand,recorded above-average growth rates,but here it was the noticeably higher inflation that led to nearly two-thirds of the market growth being attributable to p
74、rice increases alone.In France,which had by far the highest market growth in a country comparison,37%of the premium increase was fed by price increases.Although the insurance market in Germany grew at a below-average rate in the regional comparison,the inflation rate,which was also below average,mea
75、nt that only 35%of the market growth was driven by inflation.That means that the real growth of the German market(+35.6%)was even higher albeit only marginally than that of Spain(+35.2%)and the Eurozone average(+35.0%)since the end of 2001(see Figure 7).For the Eurozone,this means that nearly half o
76、f the(nominal)premium growth over the past two decades was driven by insurance inflation alone:just under EUR36bn of the additional premiums written from 2002 to 2022 were due to volume growth and almost EUR35bn to price growth.4 As we consider the non-life insurance market without health insurance
77、products in this analysis,we have adjusted the reported inflation rate accord-ingly.5 For Spain,there is no data available on insurance inflation connected with the dwelling in the year 2022;according to Eurostat,countries are not obliged to compile HICP indices for items which have a very low weigh
78、t(less than 1 per 1000),in which case these corresponding sub-items are trans-mitted with a weight of zero.Sources:Eurostat,Allianz ResearchFigure 6:Not in the driving seatHICP insurance(ex health)vs HICP all items,annual rate of change,080100120FranceGermanyItalySpainEuro areaNominal
79、 increase in GWPInsurance inflation(ex health insurance),summed upFigure 7:Not all is realNominal P&C market(private customer business)growth vs insurance inflation,2002-2022Sources:Eurostat,Allianz Research0.01.02.03.04.05.06.07.08.09.0-10-8-6-4-20242002 2003 2004 2005 2006 2007 2008 2009 2010 2011
80、 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022delta(lhs)HICP insurance(ex health)(rhs)HICP all items(rhs)10Allianz ResearchAfter the Digesting higher rates:The economic environmentinflation shockEven if the rather gloomy forecasts seem to speak a different language,the theme of the economic
81、 outlook for the next few years is normalization.After the extreme swings of recent years,caused by the Covid-19 pandemic and the war in Ukraine,the global economy should return to calmer waters.Calm is to be understood quite literally:growth will be rather low.This is hardly surprising in view of t
82、he many structural upheavals facing companies,households and the state.Adjusting to the new economic environment is taking its toll.Perhaps most obvious are the geopolitical upheavals,as manifested in the growing rivalry between the US and China.However,terms like de-globalization and de-coupling ar
83、e rather“battle cries”that unnecessarily dramatize the situation.In reality,at least for the next few years,China will remain a central player in the global economy both as a producer of numerous intermediate goods and as a consumer of Western(luxury)goods.Without question,a reconfiguration of globa
84、l supply chains is on the agenda,additionally driven by the imperatives of green transformation and national security interests.But even if the much-vaunted nearshoring is likely to lead to some(highly subsidized)investment in industrialized countries,a less connected world is at the same time a poo
85、rer one.Productivity gains due to the international division of labor were a driver for growth and prosperity around the globe over the last decades,not least in developing and emerging countries.Thus,less future growth in the worlds most populous regions will ultimately have a knock-on effect on in
86、dustrialized countries,too.In the short to medium term,however,the strongest impact on growth is likely to come from the turnaround in interest rates,possibly including dramatic dislocations in the financial markets.The recent bank turmoil provides a foretaste of this.After years of zero interest ra
87、tes and limitless liquidity,numerous unsustainable,highly leveraged business models have emerged in the 17 May 202311markets,the risks of which are only now coming to light as borrowing costs rise.The Silicon Valley Bank case was not the first and wont be the last in a series of accidents that attes
88、t to the difficulty of financial markets in adapting to the new interest-rate paradigm.So far,the banking system as a whole has proven robust,thanks in part to much tighter regulation since the last major financial crisis.However,it would be negligent to rely on this entirely.Instead,the weaknesses
89、in the regulatory architecture that have become apparent need to be addressed swiftly.This also applies to the Eurozone:Without a common deposit insurance scheme,the banking union will remain incomplete;the lack of capital requirements for government bonds also poses a risk both gaps should be close
90、d quickly.But even if a major financial crisis does not occur,the fractures that have become visible are already having an impact on the behavior of financial market participants,first and foremost banks.All indicators from hard credit data to soft survey results point to a significant slowdown in t
91、he flow of credit,if not a credit crunch(at least in some segments of the market).This will be felt even by the states which,after the spending excesses of recent years dictated by circumstances will have to switch back to a responsible fiscal policy;there is no way around a sustained consolidation
92、of public finances.It goes without saying that this combination of de-risking,expenditure-reduction and cost-cutting will dampen growth in the near future.But as paradoxical as it may sound,in a certain sense there is also something good in this development:It might help central banks in their fight
93、 against inflation.Until the recent banking turmoil,there was a justified concern that,with an economy that was quite unimpressed by the turnaround,interest rates would have to rise much more sharply in order to achieve the desired dampening of demand.This fear should now be off the table.The declin
94、e in lending gives central banks more room to maneuver;they can now act in a more cautious and wait-and-see manner,i.e.take more time to analyze the effects of their policies on the real economy.However,this is not synonymous with an end to the interest-rate turnaround.Rather,given the persistence o
95、f inflation especially core inflation excluding energy and food further rate hikes are still likely.The battle against inflation has not been won yet.However,this also means that real household incomes will remain under pressure for some time to come,with the corresponding consequences for private c
96、onsumption.At least in 2023,poison(inflation)and antidote(interest rates)will still be weighing simultaneously on economic development.The growth figures for this and next year are therefore extremely low.For Germany,economic output is expected to stagnate at best.But growth rates in the other econo
97、mic regions are also modest;this is true even for China,at least compared with previous rates(see Figure 8).But there is also a ray of hope:Contrary to previous recessions,the rise in unemployment is likely to be very small.Of course,this is primarily due to demographic developments,which have alrea
98、dy led to glaring labor shortages in many areas.But it is also due to the changed reaction function of companies:Instead of responding to a decline in demand with layoffs,they are hoarding labor,i.e.adjusting the number of hours worked rather than the number of employees.Figure 8:Calm after the surg
99、eReal economic growth in%Source:Allianz Research.-0.10%0.40%0.30%0.30%-0.30%1.10%1.00%5.00%0.80%0.80%0.70%0.90%0.60%0.40%1.20%4.80%-1%0%1%2%3%4%5%6%GermanyFranceItalyEurozoneUKUSAJapanChina2023e2024e12Allianz ResearchFigure 9:Stylized balance sheet impact(P&C insurer)Source:Allianz ResearchStructura
100、lly higher inflation:The changing global risk landscapeThe surge in inflation posed problems for insurers as the unexpected rise in prices caused claims payments to rise much more sharply than calculated,pushing the combined ratio above 100 in some segments.As a result,painful additional reserving b
101、ecame necessary.And although the life business is directly less impacted after all,benefits are generally fixed in nominal terms the second-round effects are about to hurt:The decline in real incomes forces households to reduce their saving efforts,reducing the demand for savings products.To add ins
102、ult to injury,the return of inflation goes hand-in-hand with an equally sharp rise in interest rates,putting the asset side of the balance sheet under pressure:many assets decrease significantly in value.Figure 9 depicts the combined impact of rising prices and interest rates on insurers balance she
103、ets.Although insurers have some levers at their disposal to mitigate the impact of inflation pricing,product design,indexation,asset allocation and reinsurance solutions navigating an inflationary environment remains a challenge.If the impacts on the economy and markets are considered,slowing growth
104、,declining real incomes and investment cutbacks are weighing on new business,while price corrections and market turbulence are making investment more difficult.Decrease:higher discount rateImpact of anincrease ininflationImpact of anincrease ininterest ratesNet asset valueIncrease:higher claims clre
105、serve strengthening LiabilitiesDecrease in the value of fixed income investmentsIncrease in the value of inflation-linked bondsAssetsPositiveif asset duration liability durationAlmost always negativeThus,the big question(not only for insurers)is what happens next with prices.While the peak in inflat
106、ion is certainly behind us,there are many reasons to believe that a return to the pre-pandemic and pre-war times of low inflation is not on the cards.The phase of divine coincidence,when monetary policy could generously support the economy and markets without regard to inflation risks,is irretrievab
107、ly over.For a while,the pandemic-related distortions in prices could still be regarded as temporary slips.With the onset of the Ukraine war,this narrative has collapsed.In the coming years,five structural drivers will determine inflation,namely the Five Ds:demographics,deglobalization,decarbonizatio
108、n,digitalization and debt.Taken together,these trends have an inflationary effect.For the first three Ds,this is obvious:a declining labor force increases wage pressures,while the reorganization of global value chains increases input costs and rising CO2 prices increase energy costs,at least in the
109、transition phase when there is not yet enough energy available from renewables.But digitization is also likely to have a rather price-driving effect in the future,the keywords being the increasing market power of Big Tech and data-based price discrimination.Finally,rising debt is a creeping poison t
110、hat can create an inflation bias among those in charge:13Monetary policy decisions fall under the spell of debt sustainability.However,the inflation impact of these factors can change and is significantly influenced by economic development and policy choices affecting the supply side.The decline in
111、the labor force,for example,can be mitigated by countermeasures to increase activity rates(e.g.more older workers and more women in full-time employment).The inflation impact of de-globalization or more precisely,decoupling from China depends heavily on the geopolitical circumstances.The demand side
112、 also cannot be ignored.Decarbonization is one case in point.The higher the carbon price,the faster energy systems transition away from fossil fuels and the lower the inflation impact of energy consumption.The same applies to demographics:older people generally consume less and differently,which may
113、 have a disinflationary effect.Finally,investments in innovation and automation(e.g.AI)could carry higher productivity gains,which dampen inflation.Therefore,the actual or adjusted inflation impact might be considerably different from the initial impulse.Over the long term,we see the highest inflati
114、on pressure coming from demographics,deglobalization and debt as these trends are the hardest to mitigate and might even deteriorate further.Overall,the five Ds might significantly lift annual inflation(by up to 1pp).Figure 10 summarizes the impact of these inflation drivers,including possible mitig
115、ating as well as aggravating effects.What does this mean for policymakers?Central bankers will struggle to meet their inflation targets,set at 2%in most advanced economies.Balancing inflation and growth concerns will become a permanent challenge.Ultimately,the question will arise as to the appropria
116、teness of this target in times of structurally higher inflation rates.Therefore,more than monetary policy,general economic policy will be called upon in the future to jump-start growth:productivity rather than liquidity support.This includes an active labor-market and innovation policy as well as th
117、e accelerated implementation of the energy turnaround and a consistent competition policy for digital markets.In addition,despite the changed geopolitical constellation,obvious policy mistakes must be avoided:Protectionism,subsidy races and migration hurdles will only exacerbate potential inflationa
118、ry pressures.The same applies to blank check fiscal policy,which has become increasingly widespread since Covid-19 and the energy crisis;a return to targeted measures is essential.The consequences for insurers are less clear.However,managing the asset and liability side of their balance sheets is se
119、t to become much more challenging against a highly volatile economic environment,driven by frequent policy changes and interventions.And that is before other,essential risks geopolitical confrontation,climate change and new disruptive technologies are taken into account.In the last chapter,we will t
120、ake a closer look at the new(old?)role insurers can play in such an environment.Figure 10:The five DsStructural inflation impact of long-term trends1 high:over 0.5pp p.a.,medium:0.2pp p.a.,low:below 0.2pp p.a.2 high:over 75%,medium:50%to 75%,low:below 50%Source:Allianz Research.17 May 2023strength1w
121、hy?feasibility2how?likelihood2what?Demographicshighdeclining workforce and wage pressuremediumincreasing activity rates,re-/up-skilling,automatization lowinefficient labor market policies,insufficient labor reallocationhighDecarbonizationmediumrising fossil fuel priceshighaccelerating green transiti
122、on(public investment,R&D)mediumincomplete green transition due to energy security concernslowDeglobalizationmediumincreasing input costs and less contestable product/labor marketslowreviving multi-lateralismhighincreasing fragmentaton and de-coupling of large emerging market countriesmediumDebtmediu
123、mhigher leverage creates inflation biasmediumdebt consolidationmediumundermining central banks independencemediumDigitalizationlowpricing of data and price discriminationmediumeffective regulation of the digital economymediumpersistent digital/tech monopolies,fragmented regulationlowDriversPositive
124、inflation impact(unadjusted)Potential mitigating actionsPotential aggravating developmentsEffective inflation impact14Looking ahead:Dramatic EUR4,190bn this is the huge amount of premium growth expected over the next 10 years,most of it in the life segment(EUR1,726bn)(see Figure 11).Does this mean t
125、hat the life business is on the verge of a renaissance?Unfortunately not.Even if the absolute figures seem to speak a different language,the associated growth figures are anything but impressive.While we expect annual growth to accelerate to+4.7%over the next decade(2012-2022:+3.1%),this still lags
126、well behind general economic growth,which is expected to be+5.2%per year in nominal terms.Insurance penetration will thus fall by 0.3pps to 2.8%.This is rather disappointing,given the large protection gaps that need to be closed.In pensions alone,the Global Association of Insurance Associations(GFIA
127、)estimates an annual gap of around EUR900bn.Where does our cautious assessment come from?First,we must overcome short-term headwinds.The abrupt turnaround in interest rates as welcome as higher change below the surfaceAllianz Researchrates are for the industry creates its own problems.On the one han
128、d,this concerns the value losses of many assets,but on the other hand it also affects demand,especially for products close to the capital markets,such as unit-linked policies,which are suffering from the turbulence in the stock markets.In addition,there is increasing competition from banks seeking t
129、o acquire new customer funds with higher interest rates(even if only for a short teaser period).This could lead to an increase in the lapse rate and premium exemptions.Combined with weak new business,which is also suffering from the cost-of-living crisis forcing many households to reduce their savin
130、gs,this poses new challenges for life insurers liquidity management.In the medium to long term,however,higher interest rates are positive for the life business:The industrys offerings are becoming more attractive as a result,especially for customers with a long-term focus.This is also the main reaso
131、n why we assume higher growth in our forecast than in the past.The main reason is that after a lost decade,Europe 17 May 202315and Japan should return to normal growth rates of+2.9%and+2.2%,respectively.A word on Asia:The region will remain the growth engine for the global life business,with annual
132、growth(Asia excluding Japan)expected to rise to+7.5%.The region should account for almost exactly half of absolute premium growth(EUR866bn),more than North America(EUR377bn)and Europe(EUR276bn)combined.However,it is worth noting that it is no longer China that will be driving growth;rather,at an exp
133、ected+7.1%p.a.,the Chinese market will grow at a slightly below-average rate;this also represents a significant slowdown compared to the past decade(+9.9%).The reasons lie primarily in a general weakening of Chinese economic growth;increasing internal and external headwinds are taking their toll.Nev
134、ertheless,at the end of the forecast period,Chinas life market will be the second largest in the world,with EUR706bn in premiums;still a fair way behind the US(EUR1,117bn),but also well ahead of India,the new number three(EUR330bn).While these figures suggest an unspectacular development all in all,
135、dramatic changes will take place beneath this calm surface:all elements of the value chain and thus the entire business model will have to adapt to the new challenges.This applies first and foremost to the technological revolution,which is likely to radically change the customer interface;in the lif
136、e segment,too,ecosystems for example,around the topic of wealth will play an important role in the future.But there will be more mundane challenges,too,such as increasing regulatory pressure,new accounting standards(IFRS 17),volatile financial markets and the battle for(young and increasingly old)ta
137、lent.At the same time,it must not lose Figure 11:Billion-euro boostShare of additional gross written premiums*by 2033,by region in%*The conversion into EUR is based on 2022 exchange rates.Sources:National financial supervisory authorities,insurance associations and statistical offices,Axco,Refinitiv
138、 Datastream,Allianz Research.21.816.028.421.83.78.3North AmericaWestern EuropeAsia ex JPN&CHNCHNJPNRest of the World+EUR1,726bn worldwide27.813.115.020.01.622.6+EUR1,282bn worldwidesight of what is essential:its social relevance.Demographic change poses major problems for all societies,rich and less
139、 rich alike;public pension systems will reach their limits.Without additional,private and capital-funded protection,there is a threat of new social fissures.To avoid this is the central task of the life insurance industry.In the p&c segment,additional premiums will amount to EUR1,282bn by 2033.This
140、represents an annual growth rate of+5.0%,roughly in line with the previous decade(+5.1%)and general economic growth(+5.2%);insurance penetration will therefore decrease only slightly by 1pp(to 2.0%).As in the life segment,Asia(ex.Japan)is the clear growth champion among the major regions:premium inc
141、ome is expected to grow at+8.1%p.a.China is expected to grow by+8.2%,in line with the regional average;this is also a significant slowdown compared to the previous ten years(+9.8%).In absolute terms,however,the importance of the region is lower than in the life segment:only around 35%of the expected
142、 premium growth(EUR448bn)is attributable to Asia;North America(EUR357bn)and Europe(EUR168bn)are at least collectively still stronger.There are,however,no differences from life in the ranking of the largest markets:the US(EUR1132bn)dominates by a wide margin,ahead of China(EUR442n).In view of the maj
143、or technological upheavals and new risks,this forecast,which suggests continuity,may come as a surprise.However,as in the life segment,this applies only to the surface of premium growth.The underlying changes are dramatic.This applies not least to the motor business,which in many markets still accou
144、nts for around two-thirds of retail premiums.The upcoming mobility revolution will change this.It is not so much the switch from combustion engines to electric ones that is of decisive importance,but 61.97.74.918.70.06.7+EUR1,182bn worldwideAllianz Research16the increase in new mobility services suc
145、h as car-sharing and the triumphant advance of autonomous driving.However,the impact on claims and thus also on premiums is difficult to assess by ex-ante:frequency is likely to decline,but severity is unlikely to do so.What is certain,however,is that the business model in the motor sector will chan
146、ge,with a significant shift from retail to commercial,from B2C to B2B.In addition,as in the life segment,technological changes will play a decisive role.In the p&c segment,they are likely to have an even greater impact on the business model.Ecosystems are likely to become even more important here;su
147、ccessful insurers will not only offer individual products,but comprehensive solutions for customer needs,whether for mobility,living or travel.In addition,there are the unimagined possibilities of AI in data analytics,which are likely to revolutionize the entire value chain from underwriting to clai
148、ms handling.Above all,however,there is the further increase in risks in the context of the climate crisis as well as new technologies.Extreme weather events will increase in the coming years,and with them NatCat claims from floods and droughts,forest fires and storms.At the same time,climate-mitigat
149、ion efforts will intensify,first and foremost with the decarbonization of energy supply.This requires major investments from both the private and public sectors and creates a high need for risk protection as new risks emerge.But other new technologies will give birth to new risks,too,for instance ri
150、sks related to data protection and the use of AI.It therefore requires little imagination to expect a further increase in protection gaps which already exceed EUR1,000bn in cyber and NatCat.Many of these risks will test the limits of insurability.In many cases,closer cooperation with governments wil
151、l become unavoidable.Otherwise,risks may remain insurable in a narrow sense but unaffordable for most customers.This problem also points to the crucial difference from the life segment.There,too,the protection gap is large in view of the rapid aging of society and inadequate social security systems.
152、But it can be closed with great effort in the traditional way:by mobilizing savings,i.e.,with additional premium income.The industry is challenged to advance this through innovative and inclusive concepts(shoulder-to-shoulder with the state).Regarding NatCat and cyber risks,such an approach seems le
153、ss promising.This is where we need to take a different approach:prevention,i.e.avoiding risks.The frequency and severity of(fatal)floods or cyber-attacks can be reduced with appropriate protective measures(the aging of society,on the other hand,can no longer be stopped).In the p&c segment,the indust
154、ry is therefore facing a fundamental change in its business model:the value proposition of insurers will change,from pure financial compensation to risk management and holistic service offerings to prevent and mitigate risks.In this way,its social relevance will be preserved and with it its billion-
155、dollar premium pool.In the health segment,additional premium income will amount to around EUR1,182bn over the next 10 years.Globally,the industry is expected to grow by+6.7%,well above the other segments,reflecting the backlog demand in many markets.Although other regions notably Asia might grow mor
156、e dynamically in coming years,around 60%of new premiums will still be earned in the US,which will also remain by far the biggest health insurance market,with an expected EUR1,439bn in premium income in 2033,followed by China(EUR338bn).As in the other two segments,far-reaching technology-driven chang
157、es are expected in the health segment in the coming years,too.Indeed,this is where the idea of ecosystems is most advanced(at least in China):Leading providers are not limiting themselves to medical bill payments but are orchestrating all customer needs around health.The topic of risk management and
158、 prevention is also already writ large.Many insurers already offer incentives for healthier lifestyles for example,with the help of fitness trackers and discounts.However,the biggest change and challenge comes from advances in medicine itself.Over the next few years,more individualized treatments wi
159、ll become more prevalent.Questions of cost and access will thus be raised anew;the dystopia of two-tier medicine cannot be dismissed.Inequality could become even more pronounced along the health fault line;corresponding developments have already become apparent during the Covid-19 pandemic and the d
160、ifferent ways in which individual population groups were affected.The industry is challenged here perhaps even more than in the segments of life and p&c to live up to its social role:It can only retain relevance if it places itself at the service of inclusivity and broad access to medical progress.T
161、hese developments in the individual segments are resulting in shifts in the global insurance map.North America will remain the largest health insurance market by a wide margin,but its lead will narrow as its global market share is expected to decline by almost 4pps.On the other hand,the rise of Asia
162、(ex.Japan)is set to continue:China and the rest of Asia are likely to gain almost 7pps in global market share,at the expense of Japan and Western Europe(see Figure 12).Figure 13 summarizes the expected developments for individual segments and regions over the next 10 years.17 May 202317Figure 12:The
163、 US remains on topTotal gross written premiums*,2022 and 2033 by region in%*The conversion into EUR is based on 2022 exchange rates.Sources:National financial supervisory authorities,insurance associations and statistical offices,Axco,Refinitiv Datastream,Allianz Research.43.923.810.111.45.55.340.11
164、9.113.315.24.08.3North AmericaWestern EuropeAsia ex JPN&CHNCHNJPNRest of the World20332022Figure 13:A healthy worldGross written premium*growth,CAGR 2023-2033 by region in%*Note:The conversion into EUR is based on 2022 exchange rates.Sources:National financial supervisory authorities,insurance assoc
165、iations and statistical offices,Axco,Refinitiv Datastream,Allianz Research.0.02.04.06.08.010.012.0JPNCHNWorldAsiaWestern EuropeNorth AmericaAsia ex JPN&CHNWorldtotalhealthlifep&c18Allianz ResearchInsurances role as an anchor in turbulent timesThe last couple of years had their fair share of macroeco
166、nomic shocks,from the Global Financial Crisis(GFC)and the euro crisis to the recent double whammy of Covid-19 and the Ukraine war.And the coming years are likely to be equally challenging,given rising geopolitical as well as social rifts.How will the insurance sector cope?Analyzing how the industry
167、weathered the past crises can offer some clues.Although these shocks were very different in nature,we identify one common element:the relative resilience of the insurance sector.At first glance,this is quite surprising as the sector is exposed on both sides of its balance sheet.Real economic shocks
168、hurt premiums and claims while financial shocks can wreak havoc on investment portfolios.In fact,the insurance industry is still challenged by ongoing claims inflation that is eroding profitability in the p&c business,and by falling demand in new business triggered by real income losses.But when loo
169、king at its main gauge of financial soundness,the solvency capital requirement(SCR)ratio,a picture of remarkable stability emerges since the pandemic:the median SCR ratio never fell below 200%.This stability justifies a deeper look at the reasons:How does a growth shock and a spike in inflation and
170、interest rates impact the insurance sector?And what does this mean for the role the industry has to play in the future?Although these shocks were very different in nature,one common element can be observed:The relative resilience of the insurance sector.17 May 202319In general,p&c insurance demand71
171、 reflects the development stage of an economy,indicating a positive correlation between economic and p&c insurance market development82.However,analyzing the impact of nominal GDP growth on p&c premium development8 leads to rather surprising results:When taking into account the whole time period fro
172、m 2000 to 2019,our model shows no correlation at all between GDP growth and insurance-market development.However,the results look different when running the regression model for each of the two decades separately.In the first decade,which was marked by the terrorist attacks of September 11 and the b
173、ursting of the tech bubble,GDP growth explained only 23%of insurance-premium development,albeit with a time lag of one year and a negative sign.While p&c insurance premium growth peaked at more than+10%,the world economy tumbled in the aftermath of these events.Thus,in the time span from 2000 to 200
174、5,the two variables were almost perfectly negatively correlated,with an R2 of 95%.In the second half of the first decade,when the global economy started to recover,the developments of the global p&c market and GDP growth were more in line and also positively correlated,with R2 amounting to 80%.For t
175、he second decade,the regression results were markedly higher:R2 was 61%for the whole time period.The correlation was strongest in the second half of the decade:In the sub-period between 2015 and 2019,nominal GDP growth explains more than 90%of premium growth.How do we interpret these results?Indeed,
176、there is a strong correlation between economic growth and premium income but only in“normal”or good times.When the going gets tough,premium growth decouples from the general economic development.Its not hard to understand why:The bulk of insurance(at least in p&c)is mandatory,be it motor or property
177、;there are only a few non-essential insurance policies which can be cut when households or corporates are trying to reduce expenses.7 We exclude the life business from the analysis as it is strongly influenced by the design of the public pension system and taxation regimes.8 With a single linear reg
178、ression model,using the sum of p&c premium income and nominal GDP of more than 60 markets as proxy for the global p&c insurance market and economic development.See Drivers of growth:Property&Casualty insurance()There is a strong correlation between economic growth and premium income but only in“norm
179、al”or good times.When the going gets tough,premium growth decouples from the general economic development.While it is true that they buy less cars and build fewer homes in a recession i.e.new business suffers the impact on overall premium income is muted and delayed.That is why insurance is to a gre
180、at extent immunized against liquidity problems,even in a severe downturn,and remains resilient.This has important ramifications for its investment behavior:With no liquidity drain,there is no need for fire sales;money can be continuously deployed into new investments.Therefore,in the aftermath of th
181、e Lehman shock,or when the eurozone faced near implosion as banks teetered on the brink of default and cross-border financial flows ran dry,the insurance sector maintained its role as an anchor investor.Inflation has a negative impact on insurance profitability,mainly through the claims channel:infl
182、ation leads to higher claims costs,wiping out underwriting profitability as the combined ratio might exceed 100,meaning that earned premiums are lower than incurred losses and expenses.Other channels of inflation impact are more ambiguous,given the fact that interest rates usually rise with inflatio
183、n.Thus,how investment income and the balance sheet react depends on other factors as well.Investment income,for instance,could be positively influenced by rising interest rates if higher returns on new investments overcompensate for possible impairments on past investments triggered by rising rates.
184、If interest rates and yield levels stay elevated even after the initial inflation shock,investment earnings will benefit over the coming years.The impact on the balance sheet hinges not only on how interest rates and spreads react to inflation,but mainly on the maturity(mis)match between assets and
185、liabilities.On the asset side,the investment portfolio is about to lose value,not least because the bulk of investments of the typical insurer still consists mainly of fixed-income products.But on the liability side,too,rising rates trigger a loss in value as future liabilities are discounted with a
186、 higher discount rate.How these developments play out in terms of net asset value is determined by the difference in maturities of assets and liabilities as the reaction of bond prices to interest-rate changes differs by maturity:the longer the maturity,the stronger the reaction(convexity).For life
187、insurers,for example,which hold the bulk of the industrys assets and normally have longer-dated liabilities than assets,an interest shock plays out favorably:the value of liabilities,discounted by the higher interest rate,decreases more than the value of assets.Finally,inflation impacts expenses,and
188、 most of the time negatively,if rising wages are not matched by rising productivity.20Allianz ResearchBut although the unexpected and sharp rise in prices in 2022 caught the industry on the wrong foot(since hardly anyone had expected the Russian invasion of Ukraine),the decisive point is something e
189、lse.Inflation is no stranger to the insurance industry;adjusting premiums to claims costs is at the core of the business model,it is the insurance DNA.In many segments,inflation has been causing headaches for years.Take,for instance,medical inflation:healthcare costs regularly rise faster than the g
190、eneral price level for a“good”reason:medical progress not only leads to better and more individualized treatment methods,but usually also to more costly ones.Even though innovations are by their very nature difficult to forecast reliably,the industry has been good at dealing with this kind of inflat
191、ion in the past.The industry also dealt with so-called“social inflation”,which is usually used to describe the phenomenon that compensation payments of all kinds have been set much more generously in recent years(especially in the US);this affects a number of insurance lines,e.g.motor third party ve
192、hicle liability or directors and officers liability.Especially in the latter,this can lead to premiums having to be(sharply)increased and limits reduced.However,the current situation where prices are rising across the board,is also a new challenge for the insurance industry(at least for most insuran
193、ce managers,who know the inflationary 1970s only by hearsay).This means that premium planning becomes much more challenging,often lagging price rises.One mans loss,another mans gain?For insurance customers,the fact that they have been able to buy expensive insurance cover relatively cheaply compared
194、 with the skyrocketing prices of car and home repairs is a positive development.The value of their insurance coverage has increased.Of course,insurers will try to restore their profitability in subsequent years;premium increases are inevitable because in the long run only a profitable insurance busi
195、ness can also offer lasting and reliable risk protection.But from the customers point of view,one advantage remains:because inflation came as such a surprise,the adjustments will be made later.Given the scale of the cost-of-living crisis,it is even quite likely that insurers will proceed with a sens
196、e of proportion and spread adjustments over several years,not least out of self-interest:excessive price increases could lead to sensitive volume losses if customers,households and companies alike can no longer cope.Thus,the salient feature of insurance proves its worth in turbulent times of high in
197、flation and low growth.Financial burdens can not only be shared but also smoothed out over time.The insurance industry cannot undo inflation for its customers;but it can act as a kind of buffer,creating valuable time for adjustment.And its resilience in terms of liquidity and credit makes it a bellw
198、ether for the investments needed to finance the green transition.Insurance is an essential shock absorber,not only when a house burns or the earth quakes but also in uncertain times as it flattens the curve of the economic cycle,for households and corporates alike.Inflation is no stranger to the ins
199、urance industry,adjusting premiums to claims costs is at the core of the business model,its the insurance DNA.The insurance industry cannot undo inflation for its customers;but it can act as a kind of buffer,creating valuable time for adjustment.2117 May 2023Reimagining insurance in the metaverseThe
200、 metaverse is a term that is commonly used to describe a virtual,three-dimensional ecosystem,a combination of virtual reality(VR),augmented reality(AR),extended reality(XR)and non-fungible tokens(NFTs)that can be accessed either through a browser,mobile device or headset.The phygital(mix of physical
201、 and digital environments)can elevate the remote work experience or enhance education and social interactions(see Figure 14).The metaverse can be a game changer for three categories within the insurance industry:marketing and distribution,new ways of working and insurance core activities.While inter
202、est in the metaverse exploded in 2022,82%of the tech experts surveyed by Sortlist reported that the metaverse would boom in the next five to 10 years.Not only can insurers create a personal relationship with younger audiences,but they can also create immersive experiences to educate them on risk man
203、agement and financial literacy,which could improve customer retention and referrals with improved brand awareness,increased engagement,trust and loyalty.As virtual worlds become more mainstream,a diverse range of users,including younger generations who are digital natives and more comfortable with t
204、echnology than previous generations,can establish a personal relationship with insurers,which would increase engagement.This can help insurers expand their reach beyond their traditional customer base and establish themselves as innovators and leaders in the industry while also setting a precedent a
205、s an attractive employer(see Figure 15).Sources:Metaverse for business.Sortlist.Figure 15:Target audience for a metaverse investmentSources:KPMG,Allianz Research.17 May 20230%2%4%6%8%10%12%MenBig companiesGen Z(10-25)Millenials(26-41)WomenHigh-income householdAverage Income householdGeneration alpha
206、(2012+)SinglesMarried CouplesFamiliesBoomers(42-76)Low-income householdSMBsFigure 14:Examples of current functionalities in the metaversework:collaborate on innovationsocial:watching movies,chattingshop:avatars to try on clothesgaming:matches with top athletesassets:blockchain based,NFTs,etceducatio
207、n:attend a popular lecturefitness:train with a virtual coach2217 May 2023The metaverse could also help create a virtual office that supports remote and distributed workforces.Not only can it help connect and collaborate with teams across geographic boundaries,but it can help create virtual space tha
208、t can increase training and upskilling capabilities.As loss adjusters training needs a high level of expertise and specialized knowledge in areas such as risk management,insurance regulation and claims handling,the metaverse can help upskilling workers by creating immersive and interactive training
209、programs that can help loss adjusters acquire and develop these skills both in office and remotely in a safe and controlled setting.With data analytics and machine-learning algorithms,insurers can identify knowledge gaps and create personalized training programs to address them.The insurance industr
210、y has already experienced the virtues of smart contracts but investing in metaverse capabilities could help improve other insurance core activity outcomes.With smart contracts on the platform,it could enable customers to get help from a chat bot or a customer-service expert and understand the agreem
211、ents they are signing.Using blockchain technology can create a tamper-proof record of transactions that is accessible to all parties involved,creating a more transparent and accountable insurance value chain that reduces the risk of fraud and improves trust between insurers and their customers.Two o
212、ther critical aspects of insurance that could be improved are claims processing and underwriting.By using virtual reality and augmented reality technologies,insurance companies can create digital replicas of physical objects,such as damaged property,and use these replicas to assess claims more accur
213、ately.For instance,a loss adjuster could use a virtual reality headset to inspect a damaged property remotely and assess the extent of the damage more accurately.This can help insurers expedite the claims-processing process and improve the accuracy of claims assessments.Similarly,underwriters can us
214、e virtual reality to assess risks more accurately and price policies more competitively to attract more customers.New product development is also a new frontier that can be explored by insurance companies.As the metaverse provides a platform to test and develop new products pre-launch,it can help cu
215、stomers visualize the offerings via simulations.According to McKinsey,the metaverse might have the potential to generate up to EUR5trn in value by 2030.The tech sector is at the forefront of metaverse investment,accruing 17%,followed by education(12%)and finance(11%).While metaverse announcements ha
216、ve had mixed results for companies stock prices(see Figure 16),the technology behind it could undoubtedly bring improved outcomes for insurance companies.Sources:Refinitiv,Allianz Research Figure 16:Stock market prices of companies investing in metaverse after announcements related to the metaverseA
217、llianz Research0.80.911.11.21.31.41.51.61.7-30-28-26-24-22-20-18-16-14-12-10-8-6-4-20246810 12 14 16 18 20 22 24 26 28 30Stock Price Normalized to 1Time Period(days)FacebookMetaMicrosoftNVIDIA(2020)NVIDIA(2021)AutodeskStock Price Normalized to 12317 May 202324Allianz ResearchAppendixAppendix AInsura
218、nce marketsp&clifehealthp&clifehealthp&clifehealth2022 KPIsArgentina10.21.50.02.30.40.0225340.5Australia35.414.517.12.41.01.21,353555653Austria11.45.42.72.51.20.61,280601297Bahrain0.40.10.21.10.30.528268124Belgium11.015.82.02.02.80.49451,356173Brazil21.58.711.61.30.50.71004054Bulgaria1.30.20.11.60.3
219、0.11873615Canada58.563.222.83.23.41.21,5221,644593Chile5.06.50.91.82.30.325732947China185.8330.5116.61.22.10.713023282Colombia3.93.40.61.51.30.2766611Croatia0.20.10.10.20.10.2401226Czech Republic5.81.90.52.00.70.255218648Denmark9.626.00.92.77.20.31,6354,428156Egypt0.81.50.20.30.50.17132Finland4.44.6
220、0.61.61.70.2791834105France78.3144.440.43.05.51.51,2112,234624Germany80.691.246.82.12.41.29671,094561Greece2.42.40.41.21.20.223223436Hong Kong3.859.01.81.117.20.55137,877242Hungary2.01.50.11.31.00.02031516India19.288.110.10.62.90.314627Indonesia5.410.20.90.50.90.120373Ireland4.114.72.90.82.90.68102,
221、934572Italy38.199.03.61.95.00.26451,67661Japan71.9235.71)1.85.91)5801,9021)Kazakhstan0.90.60.10.50.30.145296Kenya0.91.10.40.81.00.416208Laos0.10.0n.a.0.50.0n.a.81n.a.Lebanon0.90.30.30.20.10.11714852Malaysia4.19.40.21.12.60.11202776Mexico11.915.85.60.91.20.49312444Morocco2.22.30.41.81.90.4586212Nethe
222、rlands13.77.754.71.40.85.67804403,116Nigeria0.80.7n.a.0.20.1n.a.43n.a.New Zealand4.81.5n.a.2.10.7n.a.924291n.a.Norway10.713.00.22.63.20.11,9682,39445Pakistan0.51.6n.a.0.20.5n.a.27n.a.Peru1.92.20.40.81.00.2556511Philippines1.95.2n.a.0.51.3n.a.1745n.a.Poland11.02.90.71.70.40.12777317Portugal4.96.01.92
223、.12.50.8475586183Romania2.90.50.11.10.20.0150257Saudi Arabia4.70.67.90.60.10.912915217Singapore2.935.50.50.78.50.14935,94791Slovakia1.10.80.01.00.70.01911405South Africa4.915.9n.a.1.44.4n.a.82265n.a.South Korea89.199.9n.a.5.46.0n.a.1,7201,929n.a.Spain29.724.510.52.21.80.8624516221Sri Lanka0.30.30.00
224、.40.50.112162Sweden7.729.7n.a.1.55.7n.a.7262,819n.a.Switzerland18.825.112.32.43.21.62,1512,8701,411Taiwan8.656.312.91.38.21.93622,356542Thailand7.713.23.11.62.80.710718444Turkey8.71.51.21.50.30.21021814United Arab Emirates3.52.35.40.80.61.3367249573United Kingdom71.8229.97.72.58.10.31,0633,405114Uni
225、ted States801.6777.2718.43.33.23.02,3702,2972,124Vietnam2.07.4n.a.0.52.0n.a.2075n.a.1)Health is part of life(third sector products).Total premium income(in EUR bn)Penetration(as%of GDP)Density(per capita,in EUR)2517 May 2023Appendix BInsurance marketsp&clifehealthp&clifehealthp&clifehealthLong-term
226、developmentArgentina41.236.644.328.031.242.8155.130.51.3Australia5.7-6.14.84.52.93.357.319.824.3Austria3.4-2.34.11.92.14.014.16.84.1Bahrain2.2-2.47.03.83.56.00.60.10.3Belgium2.1-1.44.02.61.65.414.518.73.6Brazil8.912.412.88.211.68.351.429.027.9Bulgaria5.66.849.72.01.610.21.60.30.3Canada6.55.44.03.54.
227、33.985.2100.534.6Chile8.87.315.47.75.810.911.312.02.8China9.89.925.88.27.110.2442.1706.1337.9Colombia8.510.011.54.77.59.36.57.61.5Croatia3.11.410.82.73.09.10.20.10.3Czech Republic4.9-3.813.42.13.56.37.32.81.0Denmark2.06.314.12.83.08.813.136.12.3Egypt13.419.824.39.99.218.22.23.91.3Finland3.12.09.42.5
228、2.410.75.86.01.8France3.11.42.03.73.02.2117.2200.051.0Germany3.10.92.83.12.33.1112.6117.665.5Greece-1.41.315.02.72.611.43.23.21.2Hong Kong5.18.66.95.44.95.76.899.73.4Hungary7.42.813.23.73.08.43.02.10.1India12.59.518.713.212.715.875.3329.550.7Indonesia10.76.410.48.09.112.312.626.83.3Ireland3.45.47.73
229、.03.28.15.620.96.8Italy0.52.74.62.93.06.451.9136.67.1Japan2.3-0.82)2.32.22)92.0299.32)Kazakhstan9.822.314.39.413.014.12.42.20.5Kenya7.514.618.38.911.98.82.23.71.1Laos13.528.7n.a.12.823.1n.a.0.20.1n.a.Lebanon5.8-2.31.46.95.17.22.00.50.6Malaysia3.45.21.36.96.37.48.518.30.4Mexico6.59.210.98.28.710.028.
230、339.715.9Morocco5.411.76.16.57.97.84.35.41.0Netherlands-0.3-8.32.83.11.73.619.29.380.9Nigeria7.917.4n.a.12.517.7n.a.2.94.1n.a.New Zealand6.33.7n.a.3.73.6n.a.7.22.2n.a.Norway5.56.06.73.02.75.914.817.50.5Pakistan10.216.9n.a.11.616.9n.a.1.78.7n.a.Peru7.310.010.79.87.67.65.35.00.8Philippines7.712.7n.a.1
231、0.011.4n.a.5.517.1n.a.Poland5.7-6.119.93.43.79.216.04.41.8Portugal2.9-2.07.83.13.38.66.88.64.7Romania8.33.126.03.13.416.64.10.70.7Saudi Arabia8.28.611.36.35.912.29.21.027.9Singapore2.511.612.43.55.29.64.362.01.5Slovakia1.2-2.925.83.74.014.01.61.20.1South Africa1.1-0.4n.a.8.89.7n.a.12.444.0n.a.South
232、Korea6.63.9n.a.6.84.7n.a.183.4166.0n.a.Spain1.5-1.54.42.82.36.040.331.620.0Sri Lanka7.513.011.910.814.213.20.81.50.2Sweden3.84.2n.a.2.34.4n.a.9.947.6n.a.Switzerland1.3-1.92.52.71.34.225.328.919.4Taiwan4.5-0.24.95.54.24.415.688.120.7Thailand5.53.810.85.56.98.113.927.47.4Turkey27.124.826.014.012.217.1
233、36.85.56.9United Arab Emirates0.06.312.83.85.18.05.24.012.6United Kingdom3.13.22.94.03.22.8110.7326.210.5United States5.42.912.43.23.36.51,131.71,116.71,438.9Vietnam10.225.0n.a.14.414.1n.a.8.831.7n.a.1)2022 exchange rates.2)Health is part of life(third sector products).Total premium income 2033(in E
234、UR bn)1)CAGR 2023-2033(in%)CAGR 2012-2022(in%)26ALLIANZ RESEARCHOurteam262727Chief Economist Allianz SELudovic SAna Boataana.boataallianz-Andreas JArne HHead of Economic Research Allianz TradeHead of Insurance,Wealth and Trends ResearchAllianz SEHead of Macro and Capital Markets ResearchAllianz SE F
235、ranoise HuangSenior Economist for Asia Pacificfrancoise.huangallianz-Manfred StamerSenior Economist for Middle East and Emerging Europemanfred.stamerallianz-Macroeconomic ResearchMaxime LemerleLead Analyst for Insolvency Research maxime.lemerleallianz-Ano KuhanathanHead of Corporate Researchano.kuha
236、nathanallianz-Aurlien DuthoitSenior Sector Advisoraurelien.duthoitallianz-Corporate ResearchMichaela GrimmSenior EKathrin StoffelExpert WPatricia Pelayo-RomeroExpert Insurancepatricia.pelayo-Insurance,Wealth and Trends ResearchPablo Espinosa UrielCapital Market Research Analystpablo.espinosa-Capital
237、 Markets ResearchRoberta FortesSenior Economist for Ibero-Latin Americaroberta.fortesallianz-Markus ZimmerSenior Expert ESGJordi Basco-CarreraLead Investment Strategistjordi.basco_Maria LatorreB2B Sector Advisormaria.latorreallianz-Maxime DarmetSenior Economist for US and Francemaxime.darmetallianz-
238、Maddalena MartiniEconomist for Italy&GLuca MonetaSenior Economist for Africa and Middle East luca.monetaallianz-Jasmin GrschlSenior Economist for E28Recent PublicationsDiscover all our publications on our websites:Allianz Research and Allianz Trade Economic Research01/12/2022|Bank of England:First t
239、o hike,last to pause and pivot 30/11/2022|The Chinese challenge to the European automotive industry 05/05/2023|European housing home,(un)sweet home?03/05/2023|No quick wins:more jobs but little productivity in the Eurozone 28/04/2023|Policy rate decisions:the end of the beginning or the beginning of
240、 the end?26/04/2023|Unpacking returns on equity 21/04/2023|Commercial real estate concerns for US banks 19/04/2023|Allianz Pension Report 2023:Reforming against the demographic clock 11/04/2023|European food inflation hungry for profits?11/04/2023|Insolvency report:No rest for the leveraged06/04/202
241、3|US:Credit crunch in the making?05/04/2023|The green industrial revolution Investment pathways to decarbonize the industrial sector in Europe29/03/2023|Everything everywhere all at once24/03/2023|Swiss shotgun wedding Whats next?23/03/2023|Centrifugal emerging markets16/03/2023|Mind the gap:the USD
242、30trn global liquidity gap is here to stay10/03/2023|Inside corporate earnings08/03/2023|Easy come,easy go 03/03/2023|#IWD:Employ and pay them more!28/02/2023|The new risk frontier in finance:biodiversity loss23/02/2023|Russias war economy21/02/2023|The“five Ds”of structurally higher inflation17/02/
243、2023|The silver lining for global trade14/02/2023|Rates,not roses09/02/2023|Monetary policy in Central and Eastern Europe ahead of the curve?07/02/2023|A Faustian bargain:Europes answers to the US IRA02/02/2023|Falling off a savings cliff?31/01/2023|Do we need more inflation to get more corporate in
244、vestment?27/01/2023|Consumption:Whats(wealth)got to do with it?24/01/2023|No,the energy shock in Europe does not mean de-industrialization27/01/2023|Consumption:Whats(wealth)got to do with it?24/01/2023|No,the energy shock in Europe does not mean de-industrialization20/01/2023|Eurozone:quantitative
245、tightening and sovereign debt servicing cost17/01/2023|Allianz Risk Barometer 202313/01/2023|Pension reform in France:Bonjour tristesse10/01/2023|Wealth without pensions in Asia15/12/2022|Economic Outlook 23-24:Keep calm and carry on 09/12/2022|The economics of war,(and its aftermath)08/12/2022|Euro
246、zone:Old lessons for a new world29Forward looking statementsThe statements contained herein may include prospects,statements of future expectations and other forward-looking statements that are based on managements current views and assumptions and involve known and unknown risks and uncertainties.A
247、ctual results,performance or events may differ materially from those expressed or implied in such forward-looking statements.Such deviations may arise due to,without limitation,(i)changes of the general economic conditions and competitive situ-ation,particularly in the Allianz Groups core business a
248、nd core markets,(ii)per-formance of financial markets(particularly market volatility,liquidity and credit events),(iii)frequency and severity of insured loss events,including from natural catastrophes,and the development of loss expenses,(iv)mortality and morbidity levels and trends,(v)per-sistency
249、levels,(vi)particularly in the banking business,the extent of credit defaults,(vii)interest rate levels,(viii)currency exchange rates including the EUR/USD exchange rate,(ix)changes in laws and regulations,including tax regulations,(x)the impact of acquisitions,including related integration issues,a
250、nd reorganization measures,and(xi)general compet-itive factors,in each case on a local,regional,national and/or global basis.Many of these factors No duty to updateThe company assumes no obligation to update any information or forward-looking statement cont-ained herein,save for any information requ
251、ired to be disclosed by law.may be more likely to occur,or more pronounced,as a result of terrorist activities and their consequences.About Allianz ResearchAllianz Research encompasses Allianz Group Economic Research and the Economic Research department of Allianz Trade.Allianz Group Economic Researchhttps:/ 28|80802 Munich|GAllianz Trade Economic Researchhttp:/www.allianz- Place des Saisons|92048 Paris-La-Dfense Cedex|Franceresearchallianz-Director of Publications Ludovic Subran,Chief EconomistAllianz ResearchPhone+49 89 3800 7859allianzallianzallianz-tradeallianz-trade