Markets and business climate

Sustained economic growth and the largely favorable business climate in the major economic regions had positive implications overall for the global insurance industry in 2007.

In life insurance business demand for funded solutions for risk protection and retirement provision continued to increase on an international scale and created a broadly favorable environment for growth. On both the insurance and reinsurance side providers with a suitable product range and good sales positioning enjoyed a wide variety of growth opportunities. Business expansion was particularly notable in bancassurance – the sale of insurance products through bank branches. Along with regions such as Southern Europe, in which this form of distribution is traditionally widely established, its significance – assisted by relatively low barriers to market entry – grew appreciably in numerous emerging markets.

The property/casualty insurance markets were very largely overshadowed in 2007 by sustained softening notable for price erosion across a broad front. The rate decline in some areas of US business, including for example casualty insurance and the aviation and marine lines, was especially evident. Price competition here has already led to considerable erosion, although it should not be overlooked that premiums were coming back from what was originally a relatively high level.

The damage and losses caused worldwide last year by natural catastrophes and man-made disasters totaled an estimated USD 70 billion. Around 40% of this amount, roughly
USD 28 billion, was covered by insurance – and benefits paid therefore rose by more than USD 10 billion compared to the previous year. Although losses from windstorm and flood events were higher in 2007, the total burden of insured losses was slightly below the average level of the last 20 years.