This report from EY: • Analyzes 21 rapid-growth markets (RGMs) for overall outlook for and attractiveness to insurers • Develops an opportunity-risk matrix • Criteria for evaluation: o Projected insurance premium growth o Regulatory change o Macroeconomic volatility o Potential for liquidity risks o Corruption risk Full report available at: http://www.ey.com/GL/en/Industries/Financial-Services/Insurance/EY-Waves-of-change

1. Waves of change
The shifting insurance landscape in
rapid-growth markets

2. Waves of change: the shifting insurance
landscape in rapid-growth markets
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Analysis of 21 rapid-growth markets for
overall outlook for and attractiveness to
insurers.
Develops an opportunity-risk matrix
Criteria for evaluation:
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Projected insurance premium growth
Regulatory change
Macroeconomic volatility
Potential for liquidity risks
Corruption risk
Full report available at:
ey.com/insurance/wavesofchange
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Waves of change | The shifting insurance landscape in rapid-growth markets

3. About the study: market analysis
This report includes an analysis of 21 RGMs in terms of risks and
opportunities for global insurers
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Waves of change | The shifting insurance landscape in rapid-growth markets

4. Purpose of EY’s RGM study
Provide objective information, analysis and actionable insights to
insurance executives evaluating global growth investments in light of:
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Slower growth in the BRICs (Brazil, Russia, India and China), which
have been traditional targets of many investments
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Significant increases in overall contribution of rapid-growth markets to
insurance premium growth
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Need to evaluate markets that previously have attracted little attention
and for a methodological approach for balancing opportunities and
risks.
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Waves of change | The shifting insurance landscape in rapid-growth markets

5. Current matrix of opportunity and risk for
insurance investments
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Waves of change | The shifting insurance landscape in rapid-growth markets

6. Economic and premium forecasts for RGMs
in 2020
Insurance executives actively weighing investments in RGMs
will also want to consider future growth prospects
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Waves of change | The shifting insurance landscape in rapid-growth markets

7. Overview of key findings
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RGMs remain essential to growth strategies of global insurers
Profound global change is rebalancing risks and opportunities
► Slowing macroeconomic growth among the BRICs
► Regulatory openings in Mexico, Turkey, Indonesia and elsewhere
► Broad-based technology adoption
► Shifting demographics
Insurance executives must rethink top investment priorities and
expansion plans
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Waves of change | The shifting insurance landscape in rapid-growth markets

8. Key findings: most attractive markets
Turkey: government policy offers supportive environment, with
substantial risks.
► Possibility of economic downturn and return of domestic political
turmoil
► Relatively mature markets for some lines of coverage
Indonesia: projections for extremely strong economic growth
► Challenging to obtain licenses
► Acquisition as main entry route
China: despite recent slowdown, extraordinary income growth spurs auto
and home ownership
► Aging population drive development of life and health markets
► Market entry remains difficult for foreign firms
► Regulatory changes in the offing?
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Waves of change | The shifting insurance landscape in rapid-growth markets

9. Key findings: most attractive markets for
insurance investment
Malaysia: attractive mix of demographics and expected economic
growth
► A base for the development of takaful, sharia-compliant insurance
Hong Kong: low opportunity, but least risk
► Can serve as a trade route into the rest of Asia.
The United Arab Emirates (UAE): fastest-growing insurance market
among the Gulf States
► CAGR of 17% since 2007
► Regulatory changes may create opportunity for expansion of
takaful products
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Waves of change | The shifting insurance landscape in rapid-growth markets

10. RGM ranking by highest opportunity and
lowest risk
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Waves of change | The shifting insurance landscape in rapid-growth markets
Opportunity: the
degree to which
regulatory,
demographic and
economic factors are
expected to accelerate
growth in the next 2-3
years
Risk: the extent to
which macroeconomic
issues, liquidity and
corruption risks may
cause problems for
insurance firms.

11. Overview of opportunities
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RGMs will account for a greater share of global insurance
premiums
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Financial-sector stability in some RGMs exceeds that of some
developed markets – South Africa, Turkey, Thailand and Poland are
most affected markets
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New distribution channels drive growth – Malaysia, China and
Mexico are most affected markets
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RGMs pioneer micro-payments and other innovations –
India, Brazil, Mexico, Malaysia and Indonesia are most affected
markets
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Converging consumer trends foster new insurance needs –
Czech Republic, Hong Kong, Poland, China, Mexico are most
affected markets
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Waves of change | The shifting insurance landscape in rapid-growth markets

12. Overview of risks and volatility
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Macroeconomic slowdowns could limit premium growth –
Mexico, Poland and the Czech Republic are most exposed, while
Brazil is also slowing down
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Liquidity risk could affect RGMs dependent on external capital
inflows – Turkey, Morocco and Kenya are most exposed
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Corruption risks are falling on average, but persist in some
RGMs – Russia, Kenya and Nigeria remain potentially challenging
markets
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Waves of change | The shifting insurance landscape in rapid-growth markets

13. Regulatory forces
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“Make or break” factors in expansion success
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Insurance is opening to foreign firms in RGMs, but liberalization
can have a downside – India and Mexico are most affected
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Risk-based regulations in some RGMs may move ahead of
developed markets – South Africa and Chile are most affected
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Tightening of consumer protection regulations in RGMs may
also disrupt growth in insurance premiums
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Waves of change | The shifting insurance landscape in rapid-growth markets

14. Key factors for market selection and
prioritization – four waves of change
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Speed of regulatory change: some RGMs are moving quickly and
may surpass advanced economies in the stringency of risk-based
regulation and consumer protections.
New modes for consumer adoption of insurance: the rise of social
media, mobile phones and overseas educational experiences are
breaking down traditional barriers to insurance penetration. Traditional
cultures are now experiencing rapid premium growth.
Government fiscal policy: tax incentives can have significant
impacts on savings and pension services, but a weakening of
confidence in public pension and welfare plans can encourage pursuit
of private insurance alternatives.
Government attitude: many RGM governments see insurance as a
“strategic” boost for savings, investment and entrepreneurship. Some
may seek foreign expertise to develop the sector, while others will
promote domestic firms.
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Waves of change | The shifting insurance landscape in rapid-growth markets

15. Taking action: the right response for insurers
Understand and balance the considerable trade-offs between
opportunities and risks:
► Attune global strategists to potential regulatory changes, and develop
plans before new rules take effect
► Closely track consumer behaviors and rapid technological change in
specific markets
► Follow – and anticipate – changing government attitudes
► Consider how macroeconomic trends can affect specific markets
► Identify circumstances where shared service options can be applied
► Acknowledge that local culture matters across markets
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Waves of change | The shifting insurance landscape in rapid-growth markets

16. Contacts
Shaun Crawford
Global Insurance Leader
+44 (0) 207 951 2172
scrawford2@uk.ey.com
Jonathan Zhao
Asia-Pacific Insurance Leader
+85 2 2846 9023
jonathan.zhao@hk.ey.com
Andreas Freiling
EMEIA Insurance Leader
+49 6196 996 12587
andreas.freiling@de.ey.com
James Littlewood
Latin America Insurance
+1 305 415 1849
james.littlewood@ey.com