Primary insurance premiums in the industrialised economies are expected to come under pressure amid a more competitive landscape, according to Munich Re’s annual Insurance Market Outlook.

This will be felt most in the US, the world’s largest property and casualty (P&C) market, with volumes valued at €918 billion ($1.3 trillion).

Global P&C primary insurance premium growth is expected to be 3.2% this year, moderating to 2.7% next year.

North America’s premium growth this year is estimated at 3.1%, dropping to 1.5% next year, while western Europe’s growth is forecast to be 1.6% over the two years.

“In the advanced economies, the positive effect of the improved economic outlook on premium growth… is likely to be curbed by the significantly keener competitive situation,” the German reinsurer says.

This is due to the “very solid capital resources” of insurers.

Premium growth in emerging markets is estimated to be near 7.5% on average, outpacing the global rate.

Asia’s emerging markets, led by China, are set to grow 9.4% this year and 8.2% next year.

“Despite a slight weakening, growth prospects for the insurance industry in the emerging markets of Asia… remain good,” Chief Economist Michael Menhart said.

Munich Re expects P&C insurance in industrialised economies to be affected by saturation and fallout from the prolonged low interest rate policies pursued by many central banks.

Demand for cover in Asia, especially China, is set to take off sharply as disposable income continues to improve.

“In the emerging economies, additional demand for protection as prosperity continues to grow should remain the main driver for insurance markets in the next 10 years,” Munich Re says. “The No.1 growth region will continue to be the emerging markets of Asia.”

China is set to become the second-largest primary insurance market by 2025, pushing Japan and the UK down to third and fourth respectively.