China is poised to play a significant role in the global life insurance market over the next decade, with projections indicating that it will contribute approximately 17% of additional premiums worldwide. According to the latest analysis from the Swiss Re Institute (SRI), China is anticipated to generate an estimated $256 billion in additional premiums between 2025 and 2034.
The SRI’s recent sigma study, titled “Life insurance in the higher interest rate era: asset-savvy is the new asset-light,” outlines that advanced markets are expected to account for around $900 billion, or 61%, of the total additional premiums over the next decade. In contrast, emerging markets are forecasted to contribute approximately $578 billion, representing 39% of the global total.
The study forecasts a substantial increase of $1.5 trillion in global insurance savings premiums over the next ten years, driven by consumer demand for life-savings products aimed at securing higher retirement incomes. Consequently, total global premiums are projected to reach $4 trillion by 2034. This growth trajectory contrasts starkly with the previous decade, where global life insurance premiums experienced a modest increase of only $300 billion amidst a low-interest-rate environment from 2010 to 2019.
Jerome Haegeli, the Chief Economist of Swiss Re Group, emphasized the transformative impact of higher interest rates on the outlook for life insurance growth and profitability. He stated, “Higher interest rates are a game changer, providing life insurance and pension products a tailwind to much better tackle the retirement savings challenges of aging demographics.”
The normalization of interest rates has made savings products more appealing to consumers after a decade characterized by weak demand and low returns. Haegeli further explained, “Savings products are attractive again as a direct consequence of normalizing interest rates. Higher investment yields also benefit long-duration protection products.”
Paul Murray, CEO of Life & Health Reinsurance at Swiss Re, highlighted the positive market growth for life insurance driven by higher interest rates. He stated, “Higher interest rates give consumers more attractive options to secure their retirement income, and we are seeing very positive market growth for life insurance to meet this need.”
Moreover, Murray underscored the role of higher interest rates in enabling insurers to meet their cost of capital. He noted, “Higher interest rates also allow insurers to meet their cost of capital. Reinsurers can furthermore support life insurers by freeing up capital, boosting underwriting capacity, and focusing on product innovation for capital-light growth.”
