NU Online News Service, June 17, 2:56 p.m. EDT
Changes in the global economy, particularly in developing nations, present significant opportunities for the insurance industry as the global middle class expands and insurance needs grow, according to Willis Group’s chairman and CEO.
In a transcript of comments delivered by Willis executive Joe Plumeri at the Insurance Day Summit in Bermuda on June 14, he says established economic powers in the developed world will face challenges going forward, while developing economies in Asia and the Middle East will see an explosion of middle-class growth.
For the developed nations, Plumeri focuses on the U.S., where he says opportunities will emerge for private insurers as public insurance options are re-evaluated. He explains that there is already talk about scaling back the Terrorism Risk Insurance Act of 2002, there is no political will to take coverage for catastrophes such as tornadoes out of the private sector, and the U.S. government “seems to be realizing that the National Flood Insurance Program is unsustainable.”
“As the industrial world undergoes reform,” Plumeri says, “opportunities will emerge for our industry.”
But, he says, even greater opportunities exist in emerging economies such as BRIC (Brazil, Russia, India and China) nations.
Plumeri says the Financial Times reported that pent-up demand for new housing in Asia and the Middle East is “staggering,” and he adds that Goldman Sachs predicts that two billion more people will join the middle class by 2030 around the world.
“This will create demand for all types of insurance products from life and health to marine and aviation to professional liability to all types of property and casualty for both personal and commercial lines,” Plumeri says.
Brokers will also have opportunities as the emerging middle class seeks out advisers that understand them and their industries, Plumeri notes.
Plumeri concludes, “This new middle class is going to build cities, transform agriculture, build factories, insure lives, buy health insurance, ship raw materials, fly, buy boats, consume all sorts of goods and sue each other. They will want to insure all of it.
“And we’ll be there to help.”