Zurich -- The world insurance market is likely to remain low in 2009 and recover with an economic upturn in 2010, a study by Swiss Re, one of the world's largest reinsurers, said Tuesday.

Growth in life insurance premiums, the industry's biggest earner, "is expected to remain subdued and may even turn negative" in 2009 as unstable stock markets and "gloomy" employment prospects reduce sales of savings funds, Swiss Re said in a study.

"As the economy recovers, we expect both higher life premiums and better investment results as asset prices are expected to improve," said Daniel Staib, one of the authors of the study on insurance markets in 2008.

"This will not only have a positive impact on profitability, but also on shareholder capital and the ability to raise capital."

"In the medium and long-term, the outlook for life insurance remains positive," he added in a statement.

Demand for other types of insurance is likely to "remain flat" in line with the economic climate, according to Swiss Re.

"While it is expected that the recession will reduce demand for insurance cover, capital shortages will support the upward movement of prices," said Staib.

"Furthermore, demand for additional cover should increase in 2010 along with the economy. Profitability in non-life is likely to improve, mainly due to rising prices and stronger investment results," he added.

The study said insurance markets were supported by emerging economies in 2008 after the post-September financial slump hit premiums in industrialised countries.

Overall world insurance premium volume rose slightly to USD 4.27 trillion (CHF 4.62 trillion) but fell when adjusted for inflation by 2.0 percent compared to 2007, Swiss Re's study said.

Global life insurance premiums fell by 3.5 percent while non-life decreased 0.8 percent.

Swiss Re said life insurance growth was most affected by the financial crisis, with sharp falls in Britain, France and Italy.

But in emerging economies life premium growth grew by an average of 14.8 percent, according to the study.

AFP / Expatica