Global accident and health insurance : Size, segmentation and forecast for the worldwide market
David Parry, Managing Consultant at Finaccord.
The worldwide accident and health insurance market is already worth around USD 1.30 trillion in gross written premiums and is forecast to expand at a nominal compound annual growth rate of 5% up to 2018.
Worldwide, the value of accident and health insurance premiums in 2014 was USD 1.30 trillion with this global market size having risen at a nominal compound annual growth rate of 4.8% since 2010, when premiums were worth USD 1.08 trillion, though this growth rate was 3.0% in real terms (adjusting for inflation). Moreover, the US market alone made up just over 50% of the worldwide total in 2014 and will continue to represent at least a half of the global total until 2018. These are top-level findings from a new research study released by Finaccord titled Global Accident and Health Insurance: Size, Segmentation and Forecast for the Worldwide Market.
“At a respective USD 654.8 billion, USD 140.8 billion and USD 57.1 billion in gross written premiums, the US, Japan and the Netherlands were the world’s largest accident and health insurance markets in 2014”, commented David Parry, Managing Consultant at Finaccord. “Meanwhile, in nominal terms, and across the 40 major markets analysed in depth by Finaccord, the markets that grew most rapidly between 2010 and 2014 were those of Romania, China and Colombia with compound annual growth rates of 28.4%, 23.2% and 20.5%, respectively. However, once national inflation has been accounted for, these rates fall to respective real compound annual growth rates of 23.9%, 19.2% and 16.6% albeit these countries remain the most rapidly growing.”
A further significant finding of the study is that the composition of accident and health insurance markets between accident insurance on one hand and health insurance on the other varies substantially between different countries. In 2014, accident insurance premiums accounted for the highest proportion of the total combined accident and health insurance market in Norway at 81.8% while health insurance premiums as a proportion of the total peaked in South Africa at 96.9%.
"How countries fund the costs resulting from accidents and medical treatment is one of the key questions in public policy today, and the size of accident and health insurance markets varies hugely between countries depending on their national regulations," continued David Parry. "The largest markets involve compulsory premiums paid by employers and employees into private sector, mutual or state-owned insurers, as in Japan and the Netherlands, or systems reliant on private insurance, such as the US. In contrast, accident and health insurance premiums are far lower in countries with public health sectors funded by general taxation or by compulsory payments collected by the state directly; in these cases, such as Sweden, private health insurance enables customers to avoid waiting lists and to have extra treatment. However, attempts to shift from public to private sector health insurance, as in Chile, can lead to instability because the public sector tends to be left with the least affluent and least healthy customers."
Looking ahead, Finaccord’s research indicates that the global accident and health insurance market is likely to increase at slightly faster nominal and real compound annual growth rates between 2014 and 2018 than it did between 2010 and 2014 with the result that it will reach a value of around USD 1.58 trillion by 2018, which converts to USD 1.47 trillion when deflated in line with forecast inflation rates. "The demand for healthcare, and the cost of it, is only going to rise in the future," concluded David Parry. “Insurers have to focus on cost-efficient solutions if they are not going to price customers out of the market, and governments that want to tap private insurance for funding must be careful that they do not jeopardise the finances of state insurance schemes."
