Life Insurance in 2024: Slower Growth, Shifting Strategies

The life insurance industry saw a year of transition in 2024, as growth slowed and companies took defensive steps to safeguard against market and geopolitical risks. While profitability remained positive, shifting consumer demand and rising operational costs signal that the sector will need to adapt to maintain momentum.

Slower Premium Growth

After three years of robust post-pandemic expansion, gross written premiums rose by just 1.2% in 2024. The slowdown reflects weaker consumer demand, economic uncertainty, and resistance to higher rates. This puts pressure on future revenue stability, especially if premium income continues to soften.

Profitability Resilience Amid Rising Costs

Net income increased by 5.6%, driven by strong underwriting results. However, operating expenses grew at a similar rate, meaning margins remain under pressure. The sector’s return on assets improved slightly to 4.3%, but continued geopolitical uncertainty could threaten this stability.

Shifting Investment Strategies

To reduce exposure to market and geopolitical shocks, life insurers shifted away from corporate bonds, debentures, and real estate. Instead, they increased holdings of government securities and cash/deposits by 8.0% and 22.8%, respectively. While this defensive approach strengthens resilience, it could limit future returns if interest rates remain low.

Declining Penetration

The penetration ratio, the proportion of life insurance relative to GDP, fell from 28.8% in 2020 to 23.8% in 2024. This trend suggests a slower demand for life insurance compared to other financial sub-sectors, raising questions about long-term market growth.

Related-Party Concentration Risks

More than half of domestic life insurers’ assets are now tied to related parties. This creates potential pathways for financial shocks to spread across borders via intercompany transactions, especially during periods of regional volatility. Regulators are working together to monitor and address these risks.

At a Glance: Life Insurance in 2024

• Premiums up only 1.2%, marking the end of a 3-year post-pandemic growth phase.
• Net income rose 5.6% but expenses increased just as fast.
• Shift to safer assets like government securities and cash.
• Penetration ratio down from 28.8% (2020) to 23.8% (2024).
• Over 50% of assets held in related parties — a key financial stability concern.

Read more in the 2024 Financial Stability Report. Click here to download.