About Density and Penetration of Life Insurance in Europe

We are currently looking at the life insurance market in Europe and more specifically saving and retirement solutions involving wealth management by insurance companies. In the frame of our initial work, we have tried to identify the differences between the main European markets comparing each of them in terms of density and penetration: Life insurers have suffered since the financial crisis and the economic downturn and it is difficult to predict what is going to happen to this market in 2010 and maybe in a longer period. But based on this analysis there is at least two observations that can be drawn in today's context: The unbalanced UK economy: Since the 80s and under Margaret Thatcher, the UK has operated a drastic shift in terms of economic focus neglecting the industry to concentrate on financial services. This explains why life insurance premium represents more than 10% of the UK GDP right now. We believe that the lack of balance of the UK economy has been a major weakness recently as it obliged the UK government to take drastic actions to help financial institutions in difficulty during the financial crisis at an unprecedented level in comparison to other European countries. The level of debt and deficits have worsened and the strong emphasis in financial services remains a threat for the UK economy. The bancassurance model does not bring the same success across geographies: Banks are the most important intermediaries in terms of life insurance distribution in Spain, France and Italy. However, it is important to point out that life insurance density is much higher in France than in Spain and Italy. This difference cannot be only explained by the difference in GDP ranking between these countries. Following our discussions with French insurers, we have noticed that the French bancassurance model remains an example worldwide and it seems that Italian and Spanish insurers have not managed to take full advantage of the banking network to leverage potential synergies. Our objective is to understand the differences between the main European insurance markets and then anticipate how they might fare in the coming years taking into consideration the current macro-economic environment. There are plenty of uncertainties right now but asking the relevant questions is already a good step towards the right direction.