According to a new market report published by Transparency Market Research titled “Reinsurance Market – Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2018 – 2026,“ the global reinsurance market was valued at US$ 241.14 Bn in 2017 and is expected to expand at a CAGR of 4.7% from 2018 to 2026, reaching a value of US$ 364.59 Bnby the end of the forecast period. According to the report, North America was a significant contributor to the reinsurance market in terms of revenue in 2017. The prominent market share of the region is due to the favorable regulatory environment and growth in property catastrophe protection in the reinsurance market across the region, especially in the U.S. and Canada.
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Favorable regulatory environment and growth in property catastrophe protection driving the Global Reinsurance Market
The global reinsurance market is currently driven by a favorable regulatory environment. Growing focus on sustainable growth has led to the relaxation in government rules globally. For instance, in September 2018, Insurance Regulatory and Development Authority (IRDA) approved revised reinsurance regulations in India. The core purpose behind revamping the regulations is that the maximum reinsurance business is held inside the nation and preference would be given to Indian domiciled entities. In 2016, the new SSN (Superintendence of Insurance) authorities removed the regulations which set minimum limits of insurers in projects involving small and medium enterprise. The new regulation now defines only maximum limits.
Current regulatory variations are pushing the market to have fewer number of highly capitalized insurance companies. There are a large number of local players that need more capital to play in niche markets. Subsequently, demand for financial reinsurance is expected to increase in the coming years. Furthermore, increasing activity of foreign reinsurers in the global reinsurance market is contributing significantly to the growth of the market.
Thus, increasing regulatory oversight initiatives is expected to enhance reinsurance penetration, as they are expected to promote self-assurance in the insurance industry. Therefore, a favorable regulatory environment is expected to have a long term impact on the reinsurance market. Growing number of such favorable regulations by several government entities are expected to boost the reinsurance market in the coming years.
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Demand for property catastrophe protection is expected to contribute significantly to insurance renewals, provisioning any material reinsured loss. Furthermore, industries such as aviation, marine, automotive, healthcare, and agriculture are expected to show huge growth due to the high insurance penetration combined with the need to guard high value assets. Moreover, occurrence of natural calamities is encouraging individuals to avail reinsurance. Lack of disposable income is one of the major factors limiting the market growth. However, rising economic activities across the globe is expected to enhance investment in the insurance sector in the near future. The impact of this restraint is expected to remain low in the coming years.