Smaller Families, Bigger Budgets

“Mais feijoada por favor.” “Ni jintian hao ma?” “Na zdrowie!”

At dinner tables throughout emerging markets, middle-class families tuck into comfort food, share details about their day and toast each other's successes. Languages and cuisines may differ, but many elements of everyday life are often quite similar.

Common threads unite families in emerging markets from Mexico City to Jakarta and dozens of places in between. As incomes rise, families tend to have fewer children, which spurs a near-universal reshuffle in spending priorities and consumption patterns. Growing financial resources are dedicated to a tighter nuclear household. New goals come into focus, many of which are shared across the diverse range of developing economies.

Safeguarding Loved Ones with Insurance

Staying healthy, saving for the future and providing for your survivors: These are foundational desires felt by families at all income levels. As purchasing power grows, households in emerging markets are increasingly able to act on the need for protection by buying insurance. Various forms of insurance appeal to such families, including life insurance, health-care plans and coverage for cars, liability and agriculture. Many households also utilize long-term savings and annuity products offered through insurance providers.

Demand for health insurance is particularly robust in China. Members of the fast-growing middle class are purchasing supplementary private medical insurance plans to help safeguard the health of their dependents. As a result, demand for private medical insurance in China grew at a compounded annual growth rate (CAGR) of nearly 40% between 2014 and 2019, according to Swiss Re.1 Families in China are taking advantage of middle- and high-end products, which extend coverage for medical services, drugs, dental treatments and visits to public and private hospitals. Many of the insurance products combine low premiums, high coverage amounts and a simplified underwriting process—an attractive blend that fits the needs of a wide range of families.

Brazilians are acting on the same need to protect their loved ones. OECD data shows that insurance penetration—calculated as the ratio of direct gross premiums to GDP—has increased in the past decade.2 In addition, individual life insurance plans sold in Latin America's largest economy posted 19% growth between 2016 and 2019, according to Ernst & Young.3

Opportunities abound for insurance companies operating in emerging markets. Forward-thinking firms are harnessing technology to make improvements to their top and bottom lines via digitized distribution, pricing and claims administration. Insurance companies are also acutely focused on customer experiences, striving to deliver innovative new products and exceed families' ever-higher expectations.