Global Insurance Insights

A detailed analysis of trends

that shape the industry
McKinsey Global Insurance Pools – fifth edition, 2015

Authored by:
Roderick Jorna
Marlous Jutte
Samuel Gerssen
Contents

Foreword 5

Executive summary 6

Recent developments in the global insurance industry 9

A perspective on Life insurance 12

A perspective on P&C insurance 17

A perspective on Health insurance 21

Competitive dynamics 23

Appendix 27

3
Foreword

We are pleased to present “Global Insurance Insights,” the fifth edition of McKinsey’s
annual in-depth analysis of the global insurance industry, based on our proprietary
Global Insurance Pools (GIP) database. We hope it will interest those who make decisions
about allocating resources globally and those looking to deepen their understanding of
the drivers of insurance growth and profitability in all regions.

The report begins by summarizing the most important developments of 2013 and 2014.
These two years were very eventful ones for the industry, marked by strong growth in
Life and Health, steady development in P&C, and increased profitability in Life and P&C.

The report then provides a perspective on the industry’s three lines of business:
Life, P&C, and Health. What is driving the rebound in growth and profitability in Life
and will this continue? Which product categories and geographies are still growing
in P&C, and how have new risk categories had an impact? How attractive is Health and
what are the prospects for this segment in emerging markets?

We conclude our paper by providing a perspective on competitive dynamics, drawing on

the global and local insurer databases that we recently added to our GIP Markets Database.

Some notes on our approach: In general, our detailed analysis focuses on data through
2013. We have selective data available for 2014 based on preliminary reports. The
forecasting tools developed as part of McKinsey’s GIP service line were used to assess how
the insurance industry might respond over the next decade to global macroeconomic shifts.
Our “consensus scenario” assumes a recovery of GDP growth in coming years in addition
to steadily increasing interest rates. The results reported in this report reflect the output of
this model.

We hope you find this report useful and thought-provoking. Please contact us if you would
like to discuss any of the topics it raises.

Stephan Binder Vivek Agrawal Devin McGranahan

Insurance leader Insurance leader Insurance leader
Europe, Middle East & Africa Asia Pacific Americas

5
 Executive summary

In 2014, the insurance industry staged an impressive recovery, with anticipated global
growth of 6.3 percent - far exceeding the 2.8 percent reported in 2013 - and total premiums
reaching EUR 3.8 trillion. Growth in 2014 was also notable because it was higher than
nominal GDP growth for the first time in five years.

What factors help explain the industry’s strong performance? Preliminary reports suggest
that Health showed the highest growth, while Life demonstrated a strong recovery in growth
of gross written premiums (GWP) from 2013 to 2014. Growth in P&C insurance remained
relatively stable, at a decent 5 percent. Early reports also show that emerging markets grew
significantly more than mature markets (12 percent vs. 5 percent), mainly because of their
lower penetration levels and higher nominal GDP growth. The only two regions experiencing
double-digit growth were Emerging Asia and Latin America.

As in previous years, the penetration rate for mature markets (8 percent) far exceeds that of
emerging markets (3 percent). This pattern will continue, since the growth seen in emerging
markets is not yet strong enough to largely surpass nominal GDP growth and thus to
increase penetration.

At the product level, preliminary reports revealed some important trends:

ƒƒ Life. Most regions saw positive Life growth in 2014, but the amount of the increase,
as well as the factors responsible, varied by region. In a marked departure from 2013,
the US, Japan and Mature Asia demonstrated the strongest gains. Of all Life products,
endowments experienced the most growth, primarily because of a resurgence in sales
at Italian banks, but unit-linked products also performed well. Life Return on Equity (RoE)
rose from 11.5 percent in 2012 to 12.7 percent in 2013 as equity markets were strong.

ƒƒ P&C. Growth in the P&C market held steady in 2014, coming in at 5 percent. The main
growth drivers were Motor in emerging markets and Fire and Property in mature
markets. At the regional level, growth was stable, except for a significant slowdown in
Eastern Europe. As in 2013, Emerging Asia and Latin America are driving most of the
P&C growth. For profitability, P&C RoE increased in almost all regions in 2013, reaching
11.5 percent globally.

ƒƒ Health. The Health segment grew 8 percent in 2014, up from 5 percent annually in the
two previous years. Emerging markets are rapidly gaining share and should account for
about 8 percent of global premiums in 2014 (up from 5 percent in 2008). Emerging Asia
and Latin America achieved the most growth, at 31 percent and 23 percent, respectively.
The US is also expected to contribute strongly to growth as the Affordable Care Act is
raising the number of insured. Globally, the net combined ratio for Health has been under
100 percent, on average, for the last decade, with emerging markets generally reporting
higher numbers than mature markets.

We describe major trends for all product lines using final data for 2013 and earlier years, as
well as preliminary reports for 2014 (H1 or Q3). In general, our most detailed analyses focus
on the final data through 2013.

6
Competitive dynamics

US and European insurers, which once ruled the global ranks, have been steadily losing
ground to Asian companies as emerging markets grow and mature markets slow down.
Although both US and European companies have expanded into emerging markets, they
have faced many challenges and still depend on the slow-growing mature markets for most
of their business. Their struggle will likely continue, since local insurers are becoming more
competitive.

Most insurers have managed to improve their RoE in recent years, but the largest insurers
are not necessarily capturing a disproportionate share of profits in Life and Non-Life in all
countries, as our analysis in this paper will show. Mergers and acquisitions (M&A) have been
declining across all regions, mostly because companies lack available free capital. A reversal
of the downward trend is not observed yet, as several challenges to consolidation still need
to be addressed, however, there are some fundamental factors in place that could help
increase M&A activity over the long term.

7
About McKinsey’s Global Insurance Pools (GIP)
GIP features a proprietary Markets Database containing over 150,000 data points covering the largest 64 countries
worldwide and 99 percent of global insurance premiums. It includes key financial indicators for every market, from
2000 to the present, and projections to 2020.

The forecasts in this paper are based on a consensus macroeconomic scenario provided by Oxford Economics, and
the informed judgment of McKinsey’s experts. The Oxford forecast assumes average global nominal GDP growth of
6.3 percent for 2014 through 2020 (compared to 5.4 percent for the previous decade) and a gradual increase in interest
rates (which some would consider an optimistic view). The scenario does not include potential macroeconomic and
regulatory threats. For further methodological details, please refer to the Appendix.

New additions to GIP

GIP recently expanded to include information on individual insurers. It now provides integrated data on selected
global and local insurers and information on performance benchmarking.

Individual insurer databases. These include:

ƒƒ Local Insurers Database, including key financial indicators for the top 15 largest local insurers in 11 individual
insurance markets, as well as premium data for the 10 largest insurers in more than 50 countries globally
ƒƒ Global Insurers Database, including key financial statement information for over 100 major global insurers,
including their split for Life and Non-Life.

Note: the GIP Markets Database leverages data published by local regulators, which often follow local accounting
standards. The Global Insurers Database leverages annual reports, which mostly follow standards of the International
Financial Reporting Systems. This means that the Markets Database reports an RoE on average ~2 points higher than
that in the Global Insurers Database, since local accounting standards allow for more favorable valuation of assets and
liabilities. The 2013 RoE data in this paper is from the Markets Database.

Performance benchmarking. GIP’s tailored performance benchmarking allow insurance companies to compare
themselves to their peers. This in-depth analysis covers capital markets performance; financial performance for total
business, Life, and Non-Life; and country-level performance.

More detailed information on the GIP initiative can be found in the Appendix.

How GIP supports our clients

McKinsey’s Global Insurance Pools can help insurers along several dimensions. A “Granularity of Growth” analysis
can identify a company’s specific drivers of growth; our databases can also help to benchmark the company’s growth
and profitability against market performance and competitors and identify the impact of different macro-economic
scenarios on growth and future market shares.

McKinsey offers a subscription to the database giving unlimited access to all data points.

8
Recent developments in the
global insurance industry
The year 2014 should provide welcome relief for the insurance industry, with early data
suggesting that premiums have grown 6.3 percent worldwide, reaching EUR 3.8 trillion1.
This premium growth is well above the 2.8 percent reported in 2013 and also exceeds
GDP growth for the first time in five years.

The industry’s strong performance primarily stems from improvement in Life (EUR 1.8 trillion
in premiums), which is expected to have experienced 6.4 percent growth in 2014, compared
to 0.6 percent in 2013. Health premiums are also expected to see greater growth in 2014 at
8.0 percent, reaching EUR 0.8 trillion, while P&C premium growth should remain stable at
a decent 5 percent, reaching 1.2 trillion. (Exhibit 1)

Exhibit 1

Global insurance premiums beat GDP growth in 2014 for first time
in 5 years, with Health and Life as the primary drivers
Premiums in EUR billion1, CAGR in percent
Life

+1.6 +0.6 +6.4

Total insurance
1,656 1,649 1,709 1,720 1,830
Asia & Pacific Europe, Middle East & Africa Americas

2010 11 12 13 2014E
+6.3
+2.8
+3.4
3,801 P&C
3,479 3,575
3,256 3,332
1,027
921 945 +5.5 +5.0 +5.2
834 862
956 1,011 1,064 1,117 1,175
1,194 1,251
1,149 1,125 1,140

2010 11 12 13 2014E

1,272 1,345 1,418 1,436 1,523

Health

2010 11 12 13 2014E +4.7 +4.6 +8.0

644 672 706 738 796

Nominal GDP 4.6 5.3

5.5
Growth % 2010 11 12 13 2014E

1 2014 based on available H1 or Q3 reporting; at fixed exchange rates 2013

Regional growth patterns

Only two regions saw double-digit growth in 2014: Emerging Asia (15 percent) and Latin
America (13 percent). These results helped give emerging markets an overall growth rate
of 12 percent. Growth in mature markets, although solid, is lower at 5 percent. Unlike
the past few years, mature markets should see the greatest share of absolute growth
(70 percent) in 2014. (Exhibit 2)

1
All 2014 numbers are based on H1 or Q3 data.

9
 Exhibit 2

Emerging Asia and Latin America continue to outperform, while mature

markets represent largest share of growth in 2014
Percent

Total insurance premiums Absolute growth share Premiums share

Growth 2013-2014E1 2013-14E1 2014E1

Emerging Asia2 15 23 10

Latin America 13 7 4

Mature Asia3 7 9 9

North America 5 32 37

Western Europe 5 24 29

Japan 4 5 9

Eastern Europe 1 0 1

Africa -1 0 1

Total Mature 5 70 83

Total Emerging 12 30 17

1 2014 figures based on available H1 or Q3 reporting

2 Emerging Asia includes: China, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Middle East
3 Mature Asia includes: Australia, Hong Kong, New Zealand, Singapore, South Korea, Taiwan

Penetration rates

As in previous years, the 2014 industry penetration rate (premiums / nominal GDP) for
mature markets (8 percent) still largely exceeds that of emerging markets (3 percent).

When looking at growth patterns, we found that industry penetration rates in mature markets
have been fairly stable over the last decade, with an increase in Health compensating for
declines in Life and P&C. (Exhibit 3) In emerging markets, the industry penetration rate
generally rose over the same period, with approximately equal growth reported in all three
product lines. There was, however, a somewhat significant drop in Life in emerging markets
in 2011, when accounting and regulatory changes in India and China pushed sales down.
Although Life penetration has not yet returned to its pre-2011 peak, it has been relatively
stable and expected to return to growth in the coming years.

Penetration rates in mature markets remain higher than those in emerging markets. This
limited convergence, however, does not show the full picture in emerging markets, where
a more detailed analysis - for instance, one based on socioeconomic class or geographic
location - would reveal that certain subsegments are experiencing rapid growth. As one
example, urban areas are experiencing greater increases in penetration rates than rural
areas.

10
Exhibit 3

Penetration rates vary by product line and region

Penetration (Premiums/GDP)

Premiums/GDP ∆ Penetration
Percent Percent point
4.5 2004-09 2009-141

4.0
Life - Mature -0.2 -0.2
3.5
Decline in Life – EM driven by China
3.0 and India (regulatory and accounting
changes resulted in declining markets)
2.5
P&C - Mature -0.3 0.0
2.0
Health - Mature 0.4 0.1
1.5 Life - Emerging 0.3 -0.3
P&C - Emerging 0.0 0.1
1.0

0.5
Health - Emerging 0.0 0.1
0
2004 05 06 07 08 09 10 11 12 13 2014E

1 2014 based on available H1 or Q3 reporting; at fixed exchange rates 2013

11
 A perspective on Life
insurance
The Life industry has staged a strong recovery in 2014, with worldwide premium growth
(6 percent) exceeding GDP growth for the first time in years. The 2014 growth rate is also
significantly higher than the 1 percent reported in 2013, when large declines in the US
and Japan drove the entire market down.

Regional growth
Our 2014 reports suggest that Life saw growth in all major markets for the first time in years.
(Exhibit 4) Some regions, however, fared better than others because of market-specific
factors. An examination of regional trends revealed the following:

ƒƒ Western Europe’s growth of 7 percent surpassed the 6 percent reported in 2013 largely
because of the strongly rebounding Italian market. In 2011 and 2012, Italian banks
were suffering from a liquidity crisis and focused on selling deposits and other banking
products, rather than Life, to increase their own funding. In 2013, as funding needs
diminished and interest rates decreased, they again began selling more Life products,
and this trend intensified in 2014. Consumer demand for Life has been strong because
lower interest rates have renewed interest in managed products.

ƒƒ Eastern Europe saw the market decline 2 percent in 2013, while in 2014, there was
0 percent growth. A double-digit decline in Poland was largely responsible for the
market’s poor performance. (The sharp decrease there mainly resulted from the
government’s attempt to discontinue a specific short-term product that is exempt
from capital gains tax).

Exhibit 4

Life has grown in all regions except Eastern Europe and Growth rate,
Percent
Africa in 2014

Life GDDPW abs. growth Life GDDPW abs. growth Life GDDPW abs. growth
2011-12, EUR bn 2012-13, EUR bn 2013-14E1, EUR bn

Western Europe -8 -1 34 6 45 7

Emerging Asia3 7 4 15 8 28 14

North America 19 5 31 -8 11 3

Mature Asia2 23 14 0 0 16 9

Japan 5 2 14 -5 10 4

Latin America 9 26 3 7 2 3

Eastern Europe 1 10 0 -2 0 0

Africa 4 17 4 14 2 -6

World 60 4 11 1 109 6

1 Preliminary figures
2 Mature Asia includes: Australia, Hong Kong, New Zealand, Singapore, South Korea, Taiwan
3 Emerging Asia includes: China, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Middle East

12
ƒƒ Growth in North America came in at 3 percent in 2014. This is significantly up from
the 8 percent decline reported in 2013, when the industry had to deal with two factors:
a restructuring of the variable annuity business of local insurers and a normalization
effect in Group Life. (In 2012, two large pension plans transferred to insurers, resulting in
a one-off premium jump in 2012, followed by a drop in 2013). The return to growth in 2014
was also driven by an improving economy, combined with growing consumer demand.

ƒƒ Japan’s Life sector has been volatile in recent years. Growth declined in 2013 after
a reduction in the guaranteed rate and a decline in the sales of lump-sum premium
payment policies, but recovered strongly in 2014 because of two developments. First,
capital markets were strong in Japan, generating high demand for investment products.
Second, the devaluation of the yen trigged more interest in products denominated in
foreign currency.

ƒƒ Other Mature Asia (including Oceania) also saw a recovery in 2014, with an anticipated
9 percent growth (up from 0 percent in 2013). The strong returns were mainly driven by
three markets:

—— Australia benefitted from higher inflows into group superannuation. This was largely
driven by one player almost quadrupling its single-premium sales, but all players
experienced double-digit growth in Group Life as underwriting pressure increased
prices.

—— In South Korea, growth returned to normal after a decline in 2013 that partly resulted
from new regulations eliminating tax benefits for immediate annuities. South Korea’s
2013 growth was also low because of stagnant growth of savings products due to
an ongoing low interest rate environment.

—— I n Taiwan, growth temporarily increased because the government instituted new

criteria for Life policies, particularly premium-rate flexible annuities, in August 2014.
Since consumers expected the new policies would be more expensive or offer fewer
benefits, GWP jumped early in the year.

ƒƒ Emerging Asia’s 2014 growth of 14 percent comes after several years of low or
negative growth in a few large markets. China is the largest source of the growth,
with premiums increasing about 17 percent. China’s resurgence is linked to the
government’s promotion of traditional protection products and the rebound of the
tied agent channel. India also witnessed double-digit growth in 2014, which comes
after few years of low or negative growth that largely resulted from poor sales of unit-
linked products. A recent restructuring of these products, however, made them more
popular again, which resulted in a return to growth in 2014.

ƒƒ Latin America was one of the strongest regions in Life for several years, but growth
decreased from 7 percent in 2013 to 3 percent in 2014. This poor showing primarily
occurred because unit-linked sales in Brazil (~70 percent of total Life market) fell by about
8 percent between 2012 and 2014 in response to capital-market volatility and regulatory
changes. Other Life products, however, continued to grow, and Brazil’s long-term
prospects look strong.
13
 ƒƒ Africa is expected to show a decline in Life in 2014, after years of robust but volatile
growth, because of slow economic growth, high unemployment, and an unstable labor
market. While these factors have been an issue for several years, their impact was less
significant during 2012 and 2013 because the affluent segment was relatively unaffected
by the economy during that time. Furthermore, unit-linked products were in strong
demand in Africa in 2013 because of favorable equity markets. At this point, however,
the economic problems are so severe that they are significantly decreasing sales in the
affluent market as well as the mass market.

Product growth
Of all Life products, endowments saw most growth in absolute terms in 2014. (Exhibit 5)
Their gains mostly resulted from the resurgence in Life sales at Italian banks, which serve
as the primary distribution channel for endowments in that country.

Exhibit 5

Endowments made the strongest contribution to growth in 2014,

largely because the Italian market was strong
Life premiums absolute growth Endowments premiums absolute growth
2013-2014E1 2013-2014E1

EUR billion EUR billion Global growth share

Percent

Western Europe 30 52
Term Life 11
North America 2 4

Japan 4 7
Endowment 58
Mature Asia3 5 9

Annuities 10 Africa 1 -1

Emerging Asia2 17 29

Unit Linked 16 Latin America 0 0

Eastern Europe 0 0
Group Life 15
Total Endowments 58

Total Mature 42 72
Total Life 109
Total Emerging 16 28

1 2014 figures based on available H1 or Q3 reporting

2 Emerging Asia includes: China, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Middle East
3 Mature Asia includes: Australia, Hong Kong, New Zealand, Singapore, South Korea, Taiwan

Unit-linked products also made a strong contribution to growth in 2014 because strong
worldwide equity markets increased demand. It should be noted, however, that the market
effect is somewhat more muted in recent years than it was from 2004 through 2007, when
stocks were also performing well. (Exhibit 6) Several factors could be limiting the recent
growth of unit-linked products. First, consumers need to regain trust in these products in
the aftermath of the capital-market crash, especially given the prolonged unstable economic
and financial climate. Second, several country-specific trends may have posed obstacles:

ƒƒ In the US, players have been restructuring or discontinuing their variable-annuity

business in recent years because of market volatility and low interest rates. Japan

14
 Exhibit 6

The correlation between Unit-linked growth and the equity markets

performance has weakened since the 2008 economic crisis
Unit Linked premiums; indexed at 2004; Market Cap: indexed at 2004

Market Cap Unit-Linked premiums

World Europe

200 200 200 200

150 150 150 150

100 100 100 100

50 50 50 50

0 0 0 0
2004 05 06 07 08 09 10 11 12 2013 2004 05 06 07 08 09 10 11 12 2013

Asia1 Americas

300 300 200 200

150 150
200 200
100 100
100 100
50 50

0 0 0 0
2004 05 06 07 08 09 10 11 12 2013 2004 05 06 07 08 09 10 11 12 2013

1 Asia including Middle East

has experienced market changes similar to those in the US, with unit-linked premiums
dropping 70 percent between 2007 and 2013.

ƒƒ In India, more stringent regulations on sale of unit-linked products has resulted in

a continued decline in premiums since 2009.

ƒƒ Although some European markets, such as France, still aggressively push unit-linked
products, others have shifted their focus to new guarantee concepts, including unit-
linked with guarantees. And, although not very pronounced, Solvency 2 seems to have
pushed unit-linked growth somewhat in Europe.

Protection products (Term Life) continued to perform well, showing the highest growth rate
over the last 2 years (7 to 8 percent annually). Protection is one of the few remaining Life
products with limited competition from non-insurance players and generally has a higher
margin.

Profitability
RoE for Life was 12.7 percent in 2013, up from 11.5 percent in 2012. The strong equity
market, which experienced a 20 percent global TRS (Total Return to Shareholders) in 2013,
was the primary driver behind this increase. For 2014, RoE should come in 1 to 2 percent
lower, although the capital markets are still performing well, with double digit TRS (over
17 percent). This is in line with the trend seen in the 2014 published results from the
top 40 global players.

15
 Almost all regions contributed to the strong returns. (Exhibit 7) Mature Asia, however, saw
profits decline to the level of cost of equity (CoE), largely because Taiwan experienced
a one-time valuation adjustment resulting from a change in accounting methods. Africa and
Latin America also saw RoE decline, although it remained above CoE. In Western Europe,
RoE increased for the second consecutive year, since equity markets are strong and
Solvency 2 regulation does not yet have its full effect.

Exhibit 7

Many regions experienced an increase in RoE in 2013, Return on Equity

Cost of Equity
but Mature Asia, Latin America, and Africa saw a decline
Life Insurance; Percent

Western Europe North America Mature Asia1 Japan

30 30 30 30

20 20 20 20

10 10 10 10

0 0 0 0

-10 -30 -10 -10

03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13

Eastern Europe Latin America Emerging Asia2 Africa

30 30 30 30

20 20 20 20

10 10 10 10

0 0 0 0

-10 -10 -10 -10

03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13

1 Mature Asia includes: Australia, Hong Kong, New Zealand, Singapore, South Korea, Taiwan
2 Emerging Asia includes: China, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Middle East

Growth forecast
Life is not expected to continue the strong growth seen in 2014. Penetration levels are
decreasing in mature markets, and Emerging Asia is the only region where they are rising.
Overall, mature markets should see annual growth rates of 3 percent between 2014 and
2020, while emerging markets will see growth of about 12 percent annually. Given the
relatively small share of emerging markets - they only represented 17 percent of global Life
premiums in 2014 - their growth will not compensate for the slowdown in mature markets.

16
A perspective on
P&C insurance
Growth in the global P&C market continued to be very steady. It was 5 percent in 2013 and
came in about the same in 2014. At the product level, Motor showed the most growth,
driven mostly by Emerging Asia. (Exhibit 8)

Exhibit 8

Motor contributed about half of absolute growth for P&C,

driven mostly by Emerging Asia
Absolute growth P&C premiums Absolute growth Motor premiums
2013-2014E1 2013-2014E1

EUR billion EUR billion Global growth share

Percent

Western Europe 0 1
Fire &
12
Property
North America 7 28

Japan 1 3
Liability 10
Mature Asia2 1 3

Accident 4 Africa 0 1

Emerging Asia3 10 39

Motor 26 Latin America 6 24

Eastern Europe 0 1
Other P&C 6
Total Motor 26

Total Mature 9 35
Total P&C 58
Total Emerging 17 65

1 Preliminary figures for 2014

2 Mature Asia includes: Australia, Hong Kong, New Zealand, Singapore, South Korea, Taiwan
3 Emerging Asia includes: China, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Middle East

Regional growth
At the regional level, growth has generally been stable for the past three years in Western
Europe, Africa, North America and Japan. (Exhibit 9) Other regions, however, saw more
dramatic changes:

ƒƒ In Eastern Europe P&C growth was significantly lower in 2013 because the region’s
economy was suffering. The same trend is seen in 2014. In Poland, for instance, motor
premiums fell 5 percent in 2013 and continued to fall by 3 percent in 2014.

ƒƒ Growth significantly dropped in Other Mature Asia (including Oceania) from 2012
to 2013, but that reflects normalization in the wake of earlier price increases related
to bad weather. From 2013 to 2014, growth has stabilized.

ƒƒ Emerging Asia and Latin America experienced the strongest growth in 2013 and
continued to do so in 2014. Growth is mostly driven by Motor, which still represents
~60 percent of the total P&C market in these regions.

17
 Exhibit 9

P&C growth has generally been stable at the regional level Growth rate,
Percent
over the past 3 years

P&C GDDPW abs. growth P&C GDDPW abs. growth P&C GDDPW abs. growth
2011-12, EUR bn 2012-13, EUR bn 2013-14E1, EUR bn

Western Europe 4 1 3 1 5 2

North America 17 4 18 4 21 5

Mature Asia2 6 10 2 3 2 3

Emerging Asia3 15 16 16 15 15 13

Latin America 6 14 9 20 10 19

Africa 1 9 1 8 1 8

Eastern Europe 3 10 2 5 0 1

Japan 2 2 3 4 2 3

World 53 5 53 5 58 5

1 Preliminary figures
2 Mature Asia includes: Australia, Hong Kong, New Zealand, Singapore, South Korea, Taiwan
3 Emerging Asia includes: China, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Middle East

Product growth

Motor, which represented over 40 percent of global P&C premiums in 2013, remains the
largest product line in P&C. This segment also saw highest absolute growth in 2013 – a
trend that continued in 2014. In emerging markets, Motor was responsible for 60 percent
of absolute growth from 2008 through 2013, making it by far the largest growth driver. In
mature markets, Motor was only responsible for 30 percent of absolute growth over the
same period, with Fire and Property making a much greater contribution.

Although Motor is still the most significant product in mature markets, its share of premiums
fell from 45 percent in 2000 to 39 percent in 2013, and this trend is expected to continue.
Two factors can help to explain this trend. Motor expenses have continued to grow, mostly
driven by inflation and an increasing number of vehicles on the road. However, the increase
in expenses per vehicle has remained well below inflation because of operational efficiency
and the rise of the direct channel in many countries. Secondly, claims frequency and severity
differs by country. However, there has been a general trend toward a reduction in frequency,
and this should continue as technological advances, such as automatic-braking systems,
lane-change assistance, and ultimately self-driving cars, reduce the accident rate.
(Exhibit 10) The full impact of these improvements is still very uncertain and will depend on
a number of factors, including the replacement rate for cars and regulations for self-driving
cars, which can vary greatly between countries.

18
 Exhibit 10

Expenses per vehicle are increasing less than inflation;

claims frequency is falling
Motor expense development1, 2000-2013 Motor claims development, 2000-2013

CAGR, 2000-2013 US UK Austria

Number of vehicles2, stock, bn
Percent Netherlands Italy Spain
500
Claims frequency, %
450 1.5
25

400 20
Expenses per vehicle, EUR 15
350 10
170 Expenses/cars
01 03 05 07 09 11 13 5
160 Inflation
2.3 0
150
01 03 05 07 09 11 13
140
1.2 Average claims amount, index at 100
130 Net expenses Motor, EUR bn
120 75 200
01 03 05 07 09 11 13 70
150
65
60 2.7 100
55
50
50
45 0
01 03 05 07 09 11 13 01 03 05 07 09 11 13

1 Based on: US, UK, France, Italy, Netherlands, Sweden, Spain, Portugal, Ireland
2 Total number of vehicles

Several new P&C risk categories have been developed recently, but they are still at very
early stages. For instance, cyber risk only accounted for 0.04 percent of European P&C
premiums in 2013 (excluding the UK). Although the category is projected to grow 30 to
40 percent annually until 2018, it will still only represent 0.2 percent of premiums by that
year. The situation is similar in the US, where cyber risk only accounted for 0.3 percent of
P&C premiums in 2013. Given the low market share of new risk categories, we do not
expect these products to fully compensate for the limited growth of Motor in mature
markets.

Profitability
P&C RoE increased in all regions except Africa, reaching 11.5 percent globally in 2013.
(Exhibit 11) The increase was mostly driven by a favorable capital-market environment,
since some regions witnessed an increase in net combined ratio in 2013. In the US, RoE
was finally able to rise above CoE in 2013, driven by improved underwriting results,
a low incidence of natural disasters or other catastrophes, and higher investment returns.

Growth forecast
P&C growth is expected to remain stable, at about 5 percent annually until 2020. Emerging
markets will show the highest growth, around 13 percent annually, while mature markets will
only show growth of about 3 percent. Penetration rates in emerging markets are not likely to
converge to the current levels in mature markets, but rather increase modestly, while mature
markets will see penetration rates slowly decrease.

19
 Exhibit 11

RoE continued to increase in 2013 Return on Equity

Cost of Equity
P&C Insurance; Percent

Western Europe North America Mature Asia1 Japan

30 30 30 30

20 20 20 20

10 10 10 10

0 0 0 0

-10 -10 -10 -10

03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13

Eastern Europe Latin America Emerging Asia2 Africa

30 30 30 60

20 20 20 30

20
10 10 10
10
0 0 0
0

-10 -10 -10 -10

03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09 10 11 12 13

1 Mature Asia includes: Australia, Hong Kong, New Zealand, Singapore, South Korea, Taiwan
2 Emerging Asia includes: China, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Middle East

20
A perspective on
Health insurance
The Health segment has shown steady growth in recent years, increasing by about
5 percent in both 2012 and 2013 (a figure in line with nominal GDP growth). In 2014,
we anticipate 8 percent growth.

Regional growth
Emerging markets are rapidly gaining share in the Health sector. In 2014, they accounted
for about 8 percent of global premiums, up from about 5 percent in 2008. Growth in
Mature Asia and Africa was fairly stable in 2014. (Exhibit 12) For the other regions,
consider the following:

ƒƒ The US market saw a sharp increase in growth from 3 percent in 2013 to an anticipated
8 percent in 2014. The main drivers behind the increase are the launch of the Affordable
Care Act, which is raising the number of individuals with private health insurance, and
premium inflation. Since the US accounts for two thirds of global Health premiums, it
serves as the primary growth driver for the global Health sector.

Exhibit 12

Emerging Asia and Latin America show highest growth; Growth rate,
Percent
US is largest contributor to growth

Health GDDPW abs. growth Health GDDPW abs. growth Health GDDPW abs. growth
2011-12, EUR bn 2012-13, EUR bn 2013-14E1, EUR bn

North America 21 5 15 3 39 8

Emerging Asia3 4 21 5 24 8 31

Latin America 2 18 3 23 4 23

Western Europe 4 3 5 4 4 3

Mature Asia2 3 7 3 7 3 6

Africa 0 6 0 10 1 10

Eastern Europe 0 11 0 6 0 9

Japan n/a n/a n/a n/a n/a n/a

World 34 5 32 5 59 8

1 Preliminary figures
2 Mature Asia includes: Australia, Hong Kong, New Zealand, Singapore, South Korea, Taiwan
3 Emerging Asia includes: China, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Middle East

ƒƒ The markets experiencing the most growth in 2014 are Emerging Asia (31 percent) and
Latin America (23 percent). These markets also experienced the most growth in 2012
and 2013.

ƒƒ Western Europe’s growth fell from 4 percent in 2013 to 3 percent in 2014. In this region,
three countries—the Netherlands, France, and Germany—represent over 75 percent of
the market, and some developments there are constraining growth. For instance, the
Dutch market is expected to have grown 2 percent in 2014 (versus 4% in 2013) because

21
 of new regulations capping health expenditures, as well as an increase in co-payments.
Similarly, German growth will fall because of new regulations that strictly limit eligibility
for private health insurance.

ƒƒ Eastern Europe showed strong growth, going from 6 percent in 2013 to 9 percent
in 2014, but the market remains very small.

Profitability
Globally, the net combined ratio for the Health sector has been under 100 percent, on
average, for the last decade. (Exhibit 13) There are major geographic variations, however,
with emerging markets experiencing much greater volatility than mature markets and
typically reporting a higher net combined ratio. This pattern is the opposite of that in P&C,
where the combined ratio is about 4 percent lower in emerging markets than mature
markets. The difference in volatility may occur because regulations typically cap or
prescribe profitability in Health in mature markets, but not in P&C. In addition, the Health
segment is still in its early stages in emerging markets, and there will be much volatility as all
stakeholders, including regulators, insurers, and consumers, adjust to the new environment.

Exhibit 13

The net combined ratio for Health has been higher and more volatile
in emerging markets than mature markets

104 World
Mature
103
Emerging
102
101 Net CoR
’00-13, avg
100 Percent
99
99
98
97
97
97
96
95
94
93
92
91
90
2000 01 02 03 04 05 06 07 08 09 10 11 12 2013

Growth forecast
Following the pattern of the last few years, emerging markets will continue to gain share
in the Health market, increasing to about 17 percent by 2020. Two trends are responsible
for this rise: the ongoing efforts of mature markets to control healthcare expenditures and
increased attempts by emerging markets to capture opportunities related to private health
insurance.

22
Competitive dynamics

The new additions to the GIP database provide insights about individual insurers, both
within countries and at the group level. They allowed us to examine company-specific trends
for the first time in 2014, as well as to aggregate data and draw conclusions about insurers
at a global and local level.

The growth of emerging markets, combined with the relative slowdown in mature markets,
has had a major effect on company performance. US and European insurers, have been
very slowly but steadily losing ground to Asian companies. (Exhibit 14) In keeping with this
trend, Asia accounted for 5 companies in the top 15 in 2013, up from three in 2008 and two
in 2003. In a related development the global market share of the top 15 groups declined
from 25 percent in 2003 to 23 percent in 2013. This trend is also apparent at the national
level, with the market share of top companies declining in various countries.

Exhibit 14

The global concentration of the top 15 players has decreased Americas

in the last decade EMEA

Total global business (NPE), Euro bn APAC

2003 2008 2013

Axa 62 Axa 88 Axa 85

Allianz1 54 Japan Post 71 UnitedHealth 84
Generali 45 Generali 67 Allianz1 71
AIG 42 Allianz1 65 Generali 64
Aviva 38 UnitedHealth 57 Munich Re1 52
ING 38 AIG 48 Anthem 51
Zenkyoren 37 ING 45 China Life 48
Munich Re1 36 Anthem 44 Zenkyoren 46
Nippon Life 36 Zenkyoren 44 Japan Post 46
State Farm 35 Nippon Life 40 Kaiser 45
Zurich1 30 Munich Re1 39 State Farm 42
Kaiser 22 Aviva 39 Prudential UK 38
UnitedHealth 20 State Farm 37 Zurich1 36
Prudential UK 18 Kaiser 35 Nippon Life 36
CNP 18 Zurich1 34 PICC 33

Market share
25.1 24.7 23.1
of top 15

1 Premiums captured as reported in P&L and exclude UL business for certain players: Allianz (2013: 43bn); Munich Re (2013: 23bn) Zurich (2013: 13bn)

Challenges facing foreign players in emerging markets

Although European and US insurers have expanded into emerging markets, they have
faced many challenges and still depend on the slower-growing mature markets for most
of their business. Those European and US players that have established a solid presence
in emerging markets are still facing intense competition from local companies, and
many have difficulty capturing a larger share of the market (with a number of exceptions,
obviously). (Exhibit 15)

Many challenges that foreign insurers face relate to local regulations. For instance, the
market share for foreign companies in the Chinese P&C market has been under 1 percent
since 2008, partly because of a regulation stating that foreign companies can only sell P&C

23
 insurance in a limited number of provinces, making it difficult to capture a share of China’s
motor insurance business. This policy is enforced by making companies purchase licenses
(maximum of one each year). Some positive changes are occurring, however. For instance,
foreign insurers have been allowed to sell Motor TPL (Third Party Liability) since 2012, and
M&A activity has increased recently.

Local regulations are also a challenge in India, another rapidly growing market, where the
law historically stipulated that foreign partners could only have a 26 percent ownership share
in local companies. Since 2008, there was a plan to increase this to 49 percent and foreign
players entered the market at that time with the assumption that this increase would soon be
announced. However, it took 6 years for this change to occur, and it was only implemented
recently. (Regulations still stipulate, however, that ultimate control of the company needs to
remain with the Indian partner).

Exhibit 15

Local players in emerging markets still largely dominate, Foreign

Joint-Venture (foreign-local)
while multinationals struggle to increase their presence Local
Market share of foreign vs domestic players (Total business)

China India

4 1 4 1 0 0
28 30

95 95
72 70

2008 2013 2008 2013

Brazil1 Russia2

21 10 11
26 9 10
0 9

74 70 81 79

2008 2013 2011 2013

1 Shift from Foreign to Joint-Venture due to move from Mapfre to create a JV with Banco do Brasil
2 Data for earlier historical years not available

Profitability
Most insurers have managed to improve their RoE in recent years, but the largest insurers
are not capturing a disproportionate share of profits in Life and Non-Life in all countries. In
fact, insurers that ranked among the top five had an above average RoE for total business
in 7 out of the 11 countries we investigated, and in four countries, they underperformed.
Product mix does not seem to be a performance differentiator for profitability, since the
results were roughly similar for Life and Non-Life. (Exhibit 16)

In Life (and to a certain extent in P&C), scale may convey limited benefits because each
insurer has many local entities that operate somewhat independently (often driven by

24
 Exhibit 16

A top 5 position can help outperform the market, but is not a guarantee
RoE outperformance of top 5 players vs. the market, Average 2010-13, Percent

Total business Life Non-Life

Germany 9.2 5.0 11.8

France 5.1 n/a n/a

US 3.6 n/a 0

Austria1 0.7 -0.4 5.1

Switzerland 0.5 1.2 -1.7

Netherlands 0.2 -1.4 1.7

Spain 0.2 n/a n/a

Italy -0.5 -0.2 -0.6

UK -0.6 -0.4 -3.9

Portugal -1.2 n/a n/a

Belgium -3.0 n/a n/a

1 In Austria, RoE has been calculated based on pre-tax profits

country-specific regulations). But even at the country level, scale benefits are confined to
certain areas. For instance, scale may reduce administrative expenses but it has no effect on
commissions. Given the limitations of scale, other factors are more likely to affect profitability,
such as the amount of legacy, product mix, and channel mix.

M&A: recent trends and predictions

A review of the last six years shows that the number of mergers and acquisitions was
highest in 2009 (235 deals) and 2011 (221 deals). Beginning in 2012, M&A activity has shown
a steady decline across all regions, reaching a low point in 2014. (Exhibit 17) The main
factor behind the decrease is the scarcity of capital in the industry, and limited appetite from
investors to allocate more capital. A reversal of the downward trend is not observed yet, as
several challenges to consolidation still need to be addressed, such as limited cross-border
synergies, local ownership structures, new regulations (such as Solvency 2) and a tough
macro-economic environment. However, there are some fundamental factors in place that
could help increase M&A activity over the long term, including the low concentration levels
in certain markets, a rise in capital buffers seen at several insurers already, and interest from
emerging markets.

25
 Exhibit 17

M&A in the insurance sector has declined over the past few years

Number of deals per year

Global number of deals APAC EMEA Americas

Deal values, USD billions Global number of deals1

22 21 75
20 0
235 174 221 190 176 160 70
20 0 19
1 65
18 1
60
16 15 55
12 50
14
45
12 15 40
10 10
10 11 35
8 2 9 8
8 18 3 8 30
8 7 0 1 2 7 1 7
25
0 6 6 1
6 4 0 2 20
2 5 4 3 1 3 5 4 5
6 2 4
9 4 2 1 15
4 0 7 3 0 3
1 1 1 2 3
1 2
5 0 2 00 3 10
2 4 1 5 4 4 2 4
3 3 3 1 4 2 5
01 2 2 2 3
2 1 1 1 2 1
0 0 1 0

Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4-
09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14

1 Including deals for which deal values are not available

***

The insurance industry performed impressively in 2014 in terms of volumes and profitability.
Life witnessed a strong recovery in growth, while Health showed the highest growth rate.
From a geographic perspective, the emerging markets of Latin America and Emerging Asia
continue to be the highest growth areas. Despite these recent gains, the industry cannot
be complacent; there are many uncertainties and challenges ahead for which it needs
to prepare and multiple questions to answer. What is the right product strategy for Life
insurers, as Solvency 2 approaches, competition increases, and a prolonged low-interest
rate environment is becoming a new reality? What will be the speed and magnitude of the
introduction of new car technologies and how will this impact the Motor insurance market?
What growth strategies are best and what is the potential role of M&A in these?

To answer these questions and maintain a competitive edge, insurers need an in-depth
understanding of current and future trends, such as those provided by our GIP analyses,
so they can re-examine their product mix, geographic focus, and capabilities. Those
companies that identify new developments, prepare for change and adapt to the rapidly
evolving landscape may emerge as the winners.

26
Appendix

McKinsey’s Global Insurance Pools

McKinsey’s GIP initiative uses a bottom-up approach to size insurance markets.

The GIP Markets Database comprises the 64 largest insurance markets, covering
more than 99 percent of total global premiums.

The level of detail in our GIP Markets Database varies from market to market. For the less
advanced markets, the data might include gross premiums written, technical reserves,
and profits. For the more advanced markets, it includes complete sets of financial indicators
for each product line, including the mix of distribution channels. Historical data covers the
period 2000–2013, with estimates for 2014 based on H1 or Q3 reporting, and our forecasts
run until 2020. Historical data are available in local currency as well as in EUR and USD (and
other currencies). In the present report, we express the historical data and forecasts in
EUR using 2013 fixed exchange rates.

GIP distinguishes five product groups in Life, based on European terminology: Term Life,
Endowments, Annuities, Unit-linked, and Group Life (see below for detailed descriptions).
P&C includes five product groups: Motor, Fire & Property, Liability, Accident, and Other
(such as Travel). Health is considered a separate line and includes all Health premiums
underwritten by pure Health insurers and Life or P&C insurers, based on data extracted
either from the Life data or P&C records (depending on the regulatory treatment).

The distribution mix is available for the largest 35 countries. The channel categories include
tied agents, brokers/IFAs, bancassurance, branches, remote, and other (such as retailers
and car dealers).

The GIP model was built on a country-by-country basis by collecting and analyzing public
data (such as national insurance regulators’ data and/or industry association publications)
and drawing on the insights of our global network of local experts. We mapped the local
product types and distribution channels to the standard globally accepted definitions.

In addition to the Markets Database, GIP now also offers integrated data on selected
global and local insurers.

The Local Insurers Database includes key financial indicators for the top 15 largest local
insurers in 11 individual markets for the years 2005-2013. In addition, the database includes
premiums data (for Total, Life and Non-Life) for the top 10 insurance groups in 52 countries
for the period 2000-2013.

The Global Insurers Database includes key financial statement information for 105 global
insurers including their split for Life and Non-Life for the period 2005-2014.

Life product definitions

Term Life: all types of protection products with purely biometric risk coverage.

Endowments: all individual life-savings products (both single and regular premium)
that provide a guaranteed credited-rate component and a lump-sum payout. Under
US terminology, this would include Universal Life and Whole Life.

27
 Annuities: individual life-savings products (both single and regular premium) that provide a
guaranteed credited-rate component and a payout in the form of an annuity (in other words,
regular monthly payment streams either for a fixed duration or for life). Under US terminology,
this would include Fixed Annuities.

Unit-linked: individual life-savings products (both single and regular premium) for which
the policyholder bears the investment risk and that provide a lump-sum payout. Under
US terminology, this would include Variable Life, Variable Universal Life, and Variable
Annuities.

Group Life: includes Group Protection, Group Unit-linked, and Group Annuities; the largest
segment is Corporate Pensions.

Forecasting methodology
Our volumes-forecasting model is based on a series of historical multivariate regression
models that use both macroeconomic drivers and momentum as explanatory variables
for premium growth.

We run panel regressions with random effects at both country and product-category
levels. For Life, P&C, and Health, we split countries into 2 or 3 subgroups, based primarily
on each country’s level of maturity. We then run separate regressions for the subgroups at
the country and product-category levels, with particular equation specifications for each
product.

The macro-drivers we considered include GDP growth (nominal and real), long-term and
short-term interest rates, penetration, and equity market returns.

For our profit-forecasting model we also developed separate methodologies for Life, P&C,
and Health.

For P&C and Health, we take a driver-based approach in which we forecast separately
all of the components of profit (claims, costs, and investment income). For each profit
component, we test various specifications, combining macroeconomic variables (such as
GDP growth, interest rates, and inflation) and time-series variables (such as momentum
effects and mean-reversion effects). The approach for Life was similar. That said, since Life
profits are highly sensitive to capital market and regulatory conditions, any profit forecast is
only valid under the assumption of stability on both these fronts.

For both P&C and Life, we ran panel regressions grouping similar countries. Overall, the
regressions have generated superior results, with strong R² values, good stability, and
reasonable back-testing behavior.

All our models employ economic forecasts from Oxford Economics. Our global network
of local experts reviews the forecasts produced by our regression models to adjust for any
specificities in local markets (upcoming regulatory changes, demographic shifts, pension or
healthcare system reforms, etc.).

28
Use of fixed exchange rates to reduce the impact of currency fluctuations

Our analysis generally uses nominal figures based on 2013 fixed exchange rates. This
approach allows us to compare local growth rates without the interference of sometimes
highly pronounced currency fluctuations. One drawback of our method, however, is that it
does not account for differing inflation rates across countries. In consequence, estimates of
growth in markets with high inflation (such as some countries in Latin America) may show an
upward bias that can significantly distort comparisons among countries over the long term.
In some cases, there are striking differences in the results, depending upon what method we
use. For instance, an analysis using nominal figures based on fixed exchange rates showed
that growth in emerging markets was six times higher than growth in mature markets from
2011 through 2013 (12 percent versus 2 percent). When we used yearly exchange rates,
growth in emerging markets was only three times as high (9 percent versus 3 percent).

29
Global insurance heat maps
2013–20E CAGR
Life heat map Premiums, 2013, EUR billion <0% 6-10%
0-3% 10-15%
Premiums, EUR billion1 3-6% >15%

Asia Pacific ex. Japan

5
17
10% 3
10
10% 18
761
86
14
385 141 16 2
14 1
147 11 7
0 18 6 1 0
25 0
2003 2013 2020 119 85 0
363 26 1
1 1 115 66 265
1 6 1
0 57
Japan 1
9 9 0 1 40 24
1 3
11
0
0 8
3 14
-1% 2%
7
1 27
295 265 298
28
31
5 2
2003 2013 2020
1

Eastern Europe Latin America Africa North America Western Europe

4%
3% 760
1% 3% 596
459 464
328 377
10% 5% 16% 9% 9% 5%
23 47 88 33 46
6 17 11 14

2003 2013 2020 2003 2013 2020 2003 2013 2020 2003 2013 2020 2003 2013 2020

1 At fixed exchange rates 2013

30
 2013–20E CAGR
P&C heat map Premiums, 2013, EUR billion <0% 6-10%
0-3% 10-15%
Premiums, EUR billion1 3-6% >15%

Asia Pacific ex. Japan

4
7
3
6
10% 6
13% 61
14
389 54 16 17
41 1
194
59 3 6
3 9 8 1 2
23 1
2003 2013 2020 64 34 0
405 12 7
1 2 82 37 69
1 3 5
1 3
Japan 1
8 3 2 3 7 2
1 1
5
0
6 3
5 2
3
1 21
0% 1%
71 69 77 24
7
3 9
2003 2013 2020
4

Eastern Europe Latin America Africa North America Western Europe

4%
2%
573 2% 2%
14% 16% 446
374 313 365
9% 5% 10% 8% 267
148
14 33 46 14 53 4 9 16

2003 2013 2020 2003 2013 2020 2003 2013 2020 2003 2013 2020 2003 2013 2020

1 At fixed exchange rates 2013

31
Global distribution heat maps
Dominant distribution channel
Life distribution heat map Share of largest channel Tied agents & branches
(based on GPW), 2013, % Brokers
Premiums1, percent Bancassurance
Direct & other

Mexico

51 34 44
66

18 58
58
6 71
37
24 25 62
69
3 6 45

41
2009 2013 64 59
51 76 81
69 52
59 39
58
China
76 61
51 49
78 67
55

51
49 59 47
1
1
49 37 49

1 3 56

2009 2013 71

Japan Germany Italy UK2 US

23 21 10
36 34 24
53 52 41 40
17 18
27 26 59 69
9 11
59 59 50 51
36 34 29 29 3
11 19 2 3
2 3 8 11 9 7 7

2009 2013 2009 2013 2009 2013 2009 2013

2009 2013

1 Distribution figures for Austria, India, Malaysia and South Korea are based on NBP; Germany, Ireland, UK and US are based on APE
2 Bancassurance share is not separately reported and is included across all channels
32
 Dominant distribution channel
P&C distribution heat map Share of largest channel Tied agents & branches
(based on GPW), 2013, % Brokers
Premiums1, percent Bancassurance
Direct & other

Mexico

57 54
47 56

32 57
30 65
67 54
9 10
4 5 54
46
59
2009 2013 48 54
89
57 38
84 63
67 49 45
95
38
China
54 63

56
40
60
16
14
45 35
26
57
2009 2013
46

Japan Germany Italy UK2 US

11 5
47 47 36 36
52 54
96% 95% 87 84
35 31 8 7 57 57
5 6 28 34
13 17 8 7 3
4% 5% 3 2 6 7 8

2009 2013 2009 2013 2009 2013 2009 2013 2009 2013

1 Germany, China, United Kingdom, Luxembourg. South Korea, France, Chile, Slovenia, Hungary and Japan are for Non-Life
33
Authors and contributors
This report is the product of many authors and contributors. Roderick Jorna, Marlous Jutte and Samuel Gerssen
led the overall effort. A special thank you to the Global Insurance Pools team (Ankit Goel, Abhishek Gupta and
Anantdeep Singh) for their contributions.

Roderick Jorna Marlous Jutte Samuel Gerssen

Associate Principal, Amsterdam Knowledge Expert, Amsterdam Associate Principal, Amsterdam
Roderick_Jorna@mckinsey.com Marlous_Jutte@mckinsey.com Samuel_Gerssen@mckinsey.com
+31 (20) 551 3252 +31 (20) 551 3723 +31 (20) 551 3289
May 2015
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