The Impact of COVID-19 on the World's Top Insurance Markets: A Comprehensive Analysis

The Global Insurance Market's Response to COVID-19

The world’s 10 largest insurance markets are collectively expected to see their Gross Domestic Product (GDP) decrease by 4.5 percent in 2020 compared to 2019 due to the COVID-19 pandemic, according to Triple-I’s Global Macro and Insurance Outlook: Q4 2020 report. This decline is a significant indicator of the economic impact of the pandemic on the insurance sector, which is heavily dependent on economic activity for premium growth.

The Role of Economic Activity in Premium Growth

Dr. Michel Léonard, CBE, Vice President & Senior Economist at Triple-I, explains that higher economic activity typically drives premium growth higher, while lower economic activity has the opposite effect. The report projects a -4.5% year-over-year change in GDP for the world’s 10 largest insurance markets in 2020, highlighting the severe economic downturn caused by the pandemic.

The Road to Economic Recovery

The report suggests that the pace of economic recovery in 2021 will depend on several factors, including the extent of new lockdowns, the success of vaccine trials, and the efficacy of vaccine distribution. Despite these challenges, consensus forecasts point to a recovery starting in Q3 or Q4 2021, with full recovery expected in advanced economies by Q2 and Q3 2021 and in developing economies by Q3 and Q4 2021. Global GDP is expected to contract between -5.5% and -6.5% in 2020, according to benchmark forecasts from the International Monetary Fund (IMF) and the Organisation of Economic Co-operation and Development (OECD).