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Forecasting non-life insurance demand in the BRICS economies: a preliminary evaluation of the impacts of income and climate change

  • Nicola Ranger
  • Andrew Williamson
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    Insurance demand is driven by many factors, but for the emerging economies, one of the most significant historical drivers of growth has been income per capita. Based on a simple forecasting approach, we project that insurance penetration in the BRICS economies could increase at a rate of between 1.6 and 4.2% per year over the coming decade, depending on the country, due to rising per capita income. When other factors are included, this broadens to between 0.1 and 4.3% per year. This equates to a rate of increase in gross premium volumes of between 5.4 and 12.3% per year. The largest growth in insurance penetration and premium volumes is expected in China, closely followed by India and Russia. A concern for (re)insurers is how climate change may impact these growth paths. Based on current projections, we expect the impact on growth mediated through income to be small; less than a 0.4% adjustment in the annual growth rate in premium volumes to 2030.

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    File URL: http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2011/09/WP61_insurance-brics-economies-climate.pdf
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    Paper provided by Grantham Research Institute on Climate Change and the Environment in its series GRI Working Papers with number 61.

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    Date of creation: Sep 2011
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    Handle: RePEc:lsg:lsgwps:wp61
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    1. Stephanie Hussels & Damian Ward & Ralf Zurbruegg, 2005. "Stimulating the Demand for Insurance," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 8(2), pages 257-278, 09.
    2. Celine Herweijer & Nicola Ranger & Robert E T Ward, 2009. "Adaptation to Climate Change: Threats and Opportunities for the Insurance Industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 34(3), pages 360-380, July.
    3. W. J. Wouter Botzen & Jeroen C.J.M. van den Bergh, 2009. "Bounded Rationality, Climate Risks, and Insurance: Is There a Market for Natural Disasters?," Land Economics, University of Wisconsin Press, vol. 85(2), pages 265-278.
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