The growth of life and non-life insurance in Asia will outpace developed markets next year, according to Swiss Re Chief Economist Asia Clarence Wong.

He says life premiums will grow by 4.4% next year against 0.6% this year, and non-life by 6% compared with 8.1%.

In Australia, Swiss Re estimates life premiums will grow 6.7% this year and 4% next year, with non-life premiums growing by 1.2% this year and by 2.4% next year.

Mr Wong says the global industry faces three main challenges: low government yields, the Euro debt crisis and slowing growth with higher inflation in emerging markets.

“Emerging Asia is not decoupled from the developed economies and its growth is expected to slow while inflation is elevated,” he said. “But policymakers have leeway to leverage monetary and fiscal policies to counter economic slowdown.”

Most developed markets in the region recorded stable non-life premium growth in 2011, with Australia and Japan gaining from rising risk awareness and firming pricing following natural catastrophes.

Slower economic growth next year will probably affect non-life business except for Australia and Japan, which will continue to benefit from reconstruction-induced economic growth and firming pricing, Mr Wong says.

“The series of natural catastrophes in Asia may have helped to raise risk awareness and prompt corporations to seek sufficient insurance covers.

“Thus, strong growth is expected in commercial, motor, health and personal accident insurance, as well as some specialty lines such as engineering, agriculture and surety.”

In emerging Asia, non-life premium growth remained strong in most markets, with China expected to grow by 15% this year, India by 8.6% and Indonesia by 10.3%.

“Further increase in car ownership and increasing demand for health and personal accident products were key growth drivers,” Mr Wong said.

He says that despite the challenging environment, the global industry has restored capitalisation beyond 2007 levels and significant catastrophe losses have led to a hardening of reinsurance rates. Growth in Asian insurance markets will support reinsurance growth in the region.

“As insurers are increasingly pressured by new business growth and tightening solvency regulations, many will look for reinsurance solutions to relieve capital strain,” he said. “Capacity is believed to be sufficient at the right price while competition will remain keen.”