The Spanish insurance industry is expected to grow at a compound annual growth rate (CAGR) of 5.3% from EUR64.1 billion ($76.6 billion) in 2022 to EUR82.9 billion ($101.1 billion) in 2027, in terms of direct written premiums (DWP), driven by the demand for life and health insurance, forecasts GlobalData, a leading data and analytics company.
As per GlobalData’s Insurance database, the Spanish insurance industry grew by 5.3% in 2021 and 5.2% in 2022, after declining by 8.6% in 2020.
Sutirtha Dutta, Senior Insurance Analyst at GlobalData, comments: “The growth of the Spanish insurance industry during the last couple of years was driven by the increased awareness for health insurance and financial planning. In addition, the industry’s growth has been complemented by the progress of key industries of the economy such as construction, automobiles, and travel.”
General insurance was the leading segment in Spain and accounted for a 61.2% share of Spain’s insurance industry DWP in 2022. The segment is expected to grow at a CAGR of 5.5% over 2022-27, driven by the growing demand for health insurance and rise in vehicle sales.
The demand for private health insurance in Spain has been increasing during the last few years. The shortage of medical professionals and diagnostic equipment in national health services has resulted in high waiting periods and less personalized care, prompting people to opt for private healthcare. Additionally, increased health awareness following the COVID-19 pandemic and high costs of healthcare not fully covered under the national health service is creating demand for private health insurance.
Apart from health, the recovery of motor vehicle sales will also support the growth of the Spanish general insurance segment over 2022-27. According to the Spanish Association of Automobile and Truck Manufacturers (ANFAC), the registrations of car and light commercial vehicles increased by 73.3% year-on-year in January 2023.
Life insurance and pension accounted for the remaining 38.8% share of insurance DWP in 2022. The segment is expected to grow at a CAGR of 5% over 2022-27, dominated by endowment insurance. The low-interest rates currently offered by banks have encouraged consumers to invest in unit-linked life insurance policies as they provide better returns compared to bank deposits.
The growth of the Spanish life insurance segment was also supported by an aging population and a rise in household consumption. Spain is projected to become an aged society by 2040, which will drive the demand for life insurance.
Sutirtha concludes: “High inflation and the ongoing economic impact of Russia-Ukraine crisis is expected to have a negative impact on the profitability of Spanish insurers in 2023. However, the Spanish insurance industry is poised for higher growth from 2024 onwards backed by continued economic recovery.”
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