Global Reinsurance Market Size (2023 - 2030)

The Global Reinsurance Market was valued at USD 558.13 billion and is projected to reach a market size of USD 1144.23 billion by the end of 2030. Over the forecast period of 2024-2030, the market is projected to grow at a CAGR of 10.8%. 

INDUSTRY OVERVIEW

Similar to primary markets, reinsurance involves dealing with an overabundance of capital. Nearly all international reinsurance companies have widened their geographic reach to increase their clientele in Asia and Latin America, while "local" and regional companies have also attempted to grow internationally, outside their home markets. Additionally, during the past ten years, the lines between primary insurance and reinsurance have blurred since most businesses now provide both. Non-life and life/health insurance are only provided by a select few pure-play reinsurance businesses. Consumers seek asset protection in a time of the rising crime, as well as health care and retirement income, and the corporate sector needs liability protection in the event of significant losses. Demand for insurance is influenced by economic and social conditions involving liberalization, privatization, and de-monopolization. Reinsurers are often allowed to do independent business both domestically and internationally. However, some businesses restrict the deployment of individual insurers to a specific reinsurer or market. Latvia, Lithuania, Moldova, Romania, and Slovenia, to mention a few, demand foreign placement only when domestic reinsurers are unable to recognize the industry.

This digital transition has resulted in a new normal for the reinsurance sector. Customers are becoming more aware of the hazards associated with the internet, and there is a rising need for better online accountability and transparency. For digital technologies to fully realize their promise, digital trust and confidence in data handling are essential. The Swiss Digital Initiative's Digital Trust Badge, the first digital responsibility label in the world, has examined and approved just two firms' digital products, including Swiss Re. A person can recognize reliable digital services under the Swiss Digital Trust Label, and digital service providers can firmly declare one's digital responsibility.

COVID-19 IMPACT ON THE REINSURANCE MARKET

Covid-19 has a complicated effect on the need for reinsurance. As insurers attempt to minimize their exposures, it is estimated that some markets would see higher demand. In instances where the government has intervened, such as the trade credit market covered later in this blog post, there may also be a decline in demand. Because of the uncertainty surrounding the pandemic and rising primary insurance costs, Fitch Ratings presently forecasts a rise in reinsurance demand. This increasing demand is anticipated to continue for some time by the rating company. As the consequences of Covid-19 spread to a market that is becoming more competitive, reinsurance companies have a crucial role to play in its control.  Future changes to the reinsurance industry are anticipated to be considerable; Pandemic Re and other government initiatives could contribute to this. 

.MARKET DRIVERS: 

Protection against Natural disasters, growing loss cost inflation and other factor is propelling the market expansion

Natural disasters, growing loss cost inflation, and historically low investment profits all have an impact on the present pricing trend. Natural calamities and an unstable economic climate have enhanced market discipline, leading to harsher terms and conditions. More than US$ 160 billion in economic damage was reportedly caused by Hurricane Katrina. On 1.7 million claims, insurance firms in the US paid out US$ 41 billion, plus an extra US$ 8 billion for damage to offshore energy infrastructure in the Gulf of Mexico. More than 65 billion dollars in insured damages were caused by Hurricane Katrina, including 16.3 billion dollars in publicly insured losses to FEMA's National Flood Insurance Program. After accounting for inflation, it is currently projected to be close to US$ 86 billion. Demand for reinsurance capacity is increasing as primary carriers seek reliable outcomes and operational efficiency in a volatile market. Increased catastrophic activity and unfavorable loss cost trends continue to reduce capital returns, emphasizing the need for more rate increases. Third-party capital has been wary following several years of big property disaster occurrences, as well as increases in commodities and labor demand as well as short-term inflation. Few well-capitalized companies dominate the life reinsurance markets, which reduces the level of competition.

Growing technology like AI/ML is fueling the market expansion

Several reinsurance businesses used artificial intelligence and machine learning in their operations as a result of increased usage in several industries. Munich Re's new CertAI validation service will help advance ethical AI application deployment while broadening the appeal of artificial intelligence. To take advantage of attractive economic prospects, organizations from a range of industries are investing in R&D and the implementation of artificial intelligence. To prove its usefulness to customers, investors, and regulatory bodies, CertAI independently and impartially verifies the reliability of artificial intelligence in innovative product solutions.

MARKET RESTRAINTS:

Reinsurance capital has been impacted by unrealized investment losses and unfavorable currency fluctuations

All areas have experienced a reduction in reinsurance capital due to unrealized investment losses and unfavorable currency fluctuations, which have been somewhat offset by steady operational earnings and ongoing low catastrophe activity.

REINSURANCE MARKET REPORT COVERAGE:

This research report on the Reinsurance Market has been segmented and sub-segmented based on Distribution Channel, End-User and By Region.

REINSURANCE MARKET - BY DISTRIBUTION CHANNEL

• Direct Writing
• Broker

Based on the distribution channel, the reinsurance market is segmented into Direct Writing and Broker. Broker channels are estimated to contribute the most reinsurance income between 2022 and 2030, with a CAGR of around 4.6%. Connecting the insurance needs of the reinsured and the reinsurer is the main responsibility of the reinsurance broker to negotiate mutually agreeable reinsurance terms. The reinsurance broker frequently aids the reinsured in the planning and development of its reinsurance program, including gathering the reinsurance proposition and pertinent premium and loss statistical data to present to the reinsurance market when seeking reinsurance support, proposing the reinsurer's terms and conditions, placing firm orders on the reinsurer's behalf, and preparing the reinsurance slip for the reinsured. The most recent annual cyber insurance market study by PartnerRe found that brokers anticipate greater demand for cyber reinsurance across a range of market configurations in 2021. In partnership with Advisen, PartnerRe, a reinsurance company located in Bermuda, surveyed the global cyber insurance industry by interviewing 260 cyber insurance brokers and 190 cyber underwriters. According to study results, awareness of cyber insurance protection has substantially increased recently due to uniformity in price and level of protection offered. At the same time, insureds are often asking their cyber insurers for larger amounts of coverage, which suggests that the industry will keep growing gradually.

 REINSURANCE MARKET – BY END-USER

• Life & Health Reinsurance
• Non-Life/Property & Casualty Reinsurance

Based on the end-user, the reinsurance market is segmented into Life & Health Reinsurance and Non-Life/Property & Casualty Reinsurance. The Non-Life/Property & Casualty Reinsurance Companies category is anticipated to see the greatest CAGR of around 4.3% between 2022 and 2030 in terms of reinsurance revenue growth. The future of the global non-life reinsurance sector will be shaped by technological developments, alternative finance, financial market structuring approaches, and the integration of value-added services with reinsurance. The non-life reinsurance sector is also being impacted by the expansion of exchange-traded secondary markets and automated placement. Major catastrophe occurrences and natural disasters like hurricanes, tsunamis, and storms, among others, have put pressure on insurance firms due to the sharp rise in demand for property and casualty reinsurance claims. As a result, reinsurance is increasingly used by insurers. The primary trends and forces propelling development in Property and Casualty Reinsurance firms are the rises in natural disasters, the unstable investment environment and financial markets, and economic expansion.

REINSURANCE MARKET - BY REGION

• North America
• Europe
• The Asia Pacific
• Latin America
• The Middle East
• Africa

By region, the Reinsurance market is grouped into North America, Europe, Asia Pacific, Latin America, The Middle East and Africa. The most profitable region with the fastest predicted growth is the Asia Pacific. Future business growth for reinsurance businesses in APAC is anticipated to be significantly fueled by demographic development and digital transformation dynamics. As the businesses share their in-depth product knowledge with local clients and provide solutions based on their professional insurance skills, there are also chances to narrow the protection gap in nations with low insurance penetration.

The demand for financial resources by domestic insurers to cover significant risks has strengthened the reinsurance industry in the Asia Pacific region. The global markets for life and general insurance have seen some of the fastest growth in China and India. These nations' required cession regulations and expanding insurance markets have led to a rise in domestic reinsurer revenue. Due to their established regulatory frameworks and robust financial infrastructure, Singapore and Hong Kong have become major international centers for reinsurance. Important international reinsurers including Swiss Re, Munich Re, SCOR, and Hannover Re have their corporate offices in these nations. Another area of attention for reinsurers is climate volatility, which has increased the risks associated with natural disasters. With just 4.5% of natural catastrophe losses in the region likely to be covered by insurance by 2021, there is a huge market potential for both insurance and reinsurance companies.

By the end of 2030, the United States is predicted to have the largest market share, at US$ 186.6 billion, or almost 40% of the global share. Reinsurance is being used by more and more casualty insurers to strengthen their capital and development situations. Reinsurers who had previously focused on assets and other short-tail policies are now more interested in corporate reinsurance as casualty reinsurance has increased. The portfolios of the reinsurers diversified to cover casualty lines as the property insurance market worsened. Much of the recent expansion in casualty reinsurance has been driven by clients' needs to support their capital and growth. In recent years, the demand for excess reinsurance has been mostly consistent. The United States reinsurance market was impacted by the COVID-19 outbreak in 2020. The need for Reinsurance Group of America's life reinsurance service has increased since the COVID-19 pandemic's breakout. With more people realizing the value of these services, RGA has also witnessed a rise in demand for coverage and expertise, which is predicted to last.

REINSURANCE MARKET - BY COMPANIES

Some of the major players operating in the Reinsurance market include:

1. BARENTS RE REINSURANCE INC.
2. BERKSHIRE HATHAWAY INC.
3. BMS GROUP LTD.
4. CHINA REINSURANCE (GROUP) CORPORATION
5. EVEREST RE GROUP, LTD.
6. SWISS RE
7. MUNICH RE
8. COVEA
9. BROOKFIELD REINSURANCE
10. BLUEFIRE INSURANCE
11. SCOR SE
12. HANNOVER RE
13. AXA SA
14. ZURICH INSURANCE GROUP

NOTABLE HAPPENING IN THE REINSURANCE MARKET

• PARTNERSHIP - Swiss Re and Singapore's composite insurer, NTUC Income, teamed together to develop the nation's first longevity plan in March 2022. Through the division of any future payments to annuitants who live longer than estimated for their age with Swiss Re, NTUC Income will be able to secure its annuity book against future volatility. Due to the long-term nature of annuities, different solvency regimes may impose substantial capital requirements. Through this partnership, Income can improve its capital efficiency and solidify its solvency.
• EXPANSION- On behalf of more than 17,000 members of the Lloyds Bank Pension Scheme No. 1, SCOR, a global reinsurer, signed a US$ 6.6 billion longevity reinsurance deal in February 2022. Scottish Widows Limited, a branch of Lloyds Banking Group, serves as a third-party insurer in the contract since SCOR offers 100% lifetime reinsurance coverage.
• PARTNERSHIP - A securitized reinsurance agreement between Bermuda-based AXA XL Reinsurance and Bluefire Insurance, a managing general agency, was completed in July 2020. Through this agreement, Bluefire will eliminate uncertainty from its car portfolio.