Allianz Trade: GDP Explains 61% of Global P&C Premium Growth in Second Decade

Economic growth remains a significant driver for the property and casualty (P&C) insurance market globally, according to a new analysis by Allianz Trade. The study, spanning 61 countries from 2000 to 2019, found that nominal GDP growth accounted for 61% of global P&C premium development in the decade from 2009 to 2019.

However, the analysis highlights variations at the country level. While the correlation between GDP and insurance premiums is strong globally, its explanatory power differs across individual nations. The research indicated that in 30 of the analyzed countries, GDP's influence was stronger in the first decade (2000-2009), whereas in 31 countries, it was more significant during the second decade (2009-2019). The maturity of an insurance market did not affect how well GDP growth explained premium development.

Capital market developments also showed a correlation with premium growth, albeit with a time lag. The performance of the Dow Jones index explained 64% of global premium development between 2009 and 2019, while the MSCI World index explained 40%. In both instances, a one-year lag was observed.

Conversely, no single, decisive external factor was identified for the premium growth in motor and property insurance lines. For motor insurance, the number of vehicles was not the best indicator in most cases. Property insurance growth was influenced by national stock market developments, but with low explanatory power. Private consumption expenditures were the dominant factor in the first decade, while no significant external driver was found for the second decade.

Allianz Trade employed regression models using five-year time series to analyze developments across different periods and business lines. The findings underscore the importance of economic and capital market performance for the insurance sector.