Commercial insurance premium growth was nearly three timeshigher in emerging markets compared to advanced markets from2000-2010, and insurers are expected to seek more growthopportunities in these regions as economic growth slows in advancedmarkets, a new report says.

In its latest sigma study, titled “InsuringEver-Evolving Commercial Risks,” Swiss Re says average annualpremiums in emerging markets grew by 14 percent from 2000-2010,compared to 5.4 percent annual growth during that period inadvanced markets.

Looking forward, the study notes that slower premiumgrowth in advanced markets relative to emerging markets will likelycontinue into next year. “In 2013, commercial-premium growth inadvanced economies is expected to remain subdued due to thesluggish economic recovery in North America and Europe,” says SwissRe.

Consequently, “Insurers are now increasingly focusing onemerging markets for commercial-insurance growth,” the studyadds.

Speaking to the reasons behind the rapid growth in emergingmarkets, Swiss Re notes that emerging-market economies are growingat a faster rate. From 2000 to 2010, Swiss Re says the emergingmarkets achieved nominal GDP growth of about 12.4 percent, comparedto 4.9 percent for advanced economies. The faster economic growthhas produced more insurnce needs, and therefore more opportuniesfor insurers. Demand is further increased as developing nationstransform their economies from agriculture-based to industry- andservice-based. “Penetration…has risen as companies demand moreinsurance to protect themselves against more complex risks and asrisk awareness improves among smaller companies,” says SwissRe.

Focusing on China, Swiss Re says the market there has grown atan annual average rate of 32 percent since 2000, establishing Chinaas the third-largest insurance market worldwide.

Swiss Re says the emergence of Asia, and China in particular, asa major trading power has increased demand for coverages such asmarine and transport, export credit, and product liability.Spending on infrastructure from regional governments in Asia hasalso grown segments of the commercial-insurance business there.More sophisticated Asian corporations and rising risk awarenesswill further increase demand in the future, the study predicts.

Furthermore, regulatory changes in China have also led toopportunities for insurers. “For example,” says Swiss Re, “theBeijing Municipal Government made employers' liability and publicliability insurance mandatory for certain high-risk industriesbeginning July 1, 2011.”

The introduction of compulsory motor insurance has greatly aidedinsurance penetration in China as well. Commercial auto accountsfor about 65 percent of commercial-premium volume in China, saysSwiss Re, adding that excluding commercial auto, China would rankas the seventh-largest commercial insurance market rather than thethird-largest.

In Latin America, property insurance is the biggestcommercial-insurance line as buyers seek protection forinfrastructure projects from natural catastrophes that impact theregion.

While emerging markets are enjoying strong economic growth, andtherefore growth in their commercial-insurance markets, theadvanced markets still dominate the $600 billion in globalpremiums. Swiss Re notes that of the 10 biggestcommercial-insurance markets, eight are advanced countries. TheU.S. alone accounts for $237 billion of the global-premium figure.China, the largest of the emerging markets, accounts for $31billion by comparison. Swiss Re notes that the advanced marketscontinue to dominate despite slower growth “because of the sheersize of their commercial-insurance sector.”

Interestingly, changes in advanced-market economies has broughtchanges in demand for commercial-insurance products, Swiss Repoints out. “Structural developments in advanced economies, such asthe expansion of the services sector at the expense ofmanufacturing, are shifting the demand for commercial insurancetoward liability insurance,” the study says.

Liability lines are growing faster than the overall economy inadvanced markets, while property-insurance lines are growing moreslowly. By contrast, in China, liability lines make up just 6percent of commercial premiums.