Specialty Insurance Market

Market Overview

The global specialty insurance market size was valued at USD 80,815 million in 2021. It is projected to reach USD 178,522 million by 2030, growing at a CAGR of 9.3% during the forecast period (2022–2030). 

Specialty insurance offers coverages for riskier accounts and odd, challenging, and unique insurance needs. One of the main risks covered by specialty insurance is the unplanned postponement of a wedding, vacation cancellation, identity theft, and theft of valuables like jewels, collectibles, or firearms. Directors & officers' liability insurance, errors & omissions insurance, commercial umbrella insurance, and cyber liability insurance are some types of specialty insurance.

Furthermore, the premiums under this insurance are calculated depending on the specific industry, risk factors, and the amount of coverage for specified needs. Specialty insurance can cover both admitted and non-admitted products and insure against various business lines' specific risks. With a great deal of flexibility concerning coverage, policy term, and policy duration, it offers a variety of coverage possibilities. Additionally, the industry is driven by increased demand for specialist knowledge and technological improvements.

Market Dynamics

Drivers: Technological Advancements

Technologies such as blockchain and the Internet of Things (IoT) enable real-time tracking and monitoring of information regarding the activity of insured for particular business lines. Furthermore, implementing these technologies provides an ability to accurately assess current and future risks in specialty insurance. In addition, it allows underwriters to clearly understand risk scores and the contributory factors in the losses and settle specialty insurance claims accordingly. Therefore, these significant benefits and advanced solutions provided by the implementation of blockchain and IoT are driving the specialty insurance market growth.

Drivers: Benefits Associated with Specialty Insurance

With the ability to provide both admitted and non-admitted products, specialty insurance covers niche and unique perils across a wide range of business lines. It offers multiple coverage options with tremendous flexibility in terms of coverages, policy term, and policy period. Moreover, due to the COVID-19 pandemic, several business lines such as directors and officers liability insurance (D&O) and errors and omissions insurance (E&O) have led to the massive demand for customized coverages in specialty insurance. In addition, businesses expect a rapid re-evaluation of risk portfolios that cover their unique needs and preferences. Therefore, numerous benefits provided by specialty insurance in terms of enormous flexibility and surrounding niche business lines are driving the market growth.

Restraint: Extremely Volatile Market

The specialty market is experiencing a highly volatile capital environment. In addition, the specialty insurance is covered for a long term and involves customized coverages for the particular insurance. Consequently, high volatile insurance market during the COVID-19 global health crisis led to lower demand for specialty insurance and created enormous challenges for specialty underwriting expertise. Therefore, with this continuous fluctuation in businesses and changes in premiums, the growth of the specialty insurance market forecast is hampered.

What Are Future Growth Opportunities in Global Specialty Insurance Market 

• Untapped Potential of Emerging Economies

Developing economies offer significant opportunities for specialty insurance providers to expand their offerings, as several businesses are adopting new business models. Thus, demand for niche and customized specialty insurance continues to rise globally. In the upcoming years, there is expected to be significant growth potential for the specialty insurance market analysis due to high investments in digital transformation, adoption of new technologies like artificial intelligence, analytics, big data, machine learning, and chatbots, and the rapid expansion of domestic business, particularly among nations like Singapore, Hong Kong, China, and South Korea. As a result, emerging economies across Asia-Pacific are expected to offer the remunerative opportunity for expanding the global market in upcoming years.

Regional Analysis

Based on regions, the global specialty insurance market share is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

Predominance of Europe in the Global Market

Europe is the highest revenue contributor and is estimated to grow at a CAGR of 8.9% during the forecast period. The increase in usage of chatbots and voice assistants' platforms for assisting businesses and individuals demanding specialty insurance has become one of the significant trends in the market. The specialty insurance market is expected to grow significantly with customized coverages and tremendous flexibility in choosing coverages.

Asia-Pacific is the fastest-growing region. Insurers in Asia-Pacific are providing unparalleled underwriting expertise and conducting several programs to grow the specialty insurance market. Continuous growth in corporates and small & medium enterprises demanding customized coverages is further boosting the growth of the specialty insurance market in the region. Moreover, the Insurance Regulatory and Development Authority of India (IRDAI) created a protection & indemnity (P&I) club in the Indian marine, aviation, & transport sector in 2021. The regulators have collaborated with the Indian National Ship Owners Association (INSA) regarding the move, which boosts the growth of the specialty insurance market in the country.

Moreover, the increased number of specialty insurance providers across China, Japan, and India and the rise in demand for niche coverages, which are generally not covered under traditional insurance policies, are critical factors accelerating specialty insurance market growth across the region. Wholesale brokers play an essential role in underwriting expertise, enhancing market relationships, and delivering niche & unique specialty insurance coverage in the market. Specialty insurance carriers are investing capital into international companies region and aiming at expanding businesses by entering into mergers & acquisitions. This, as a result, boosts the demand for specialty insurance for several coverages such as political risk & credit insurance, directors & officers, and aviation & transport insurance. 

North America is the second largest region. The North American specialty insurance market is projected to reach USD 53,646 million by 2030, growing at a CAGR of 8.1% during the forecast period. Corporations primarily adopt specialty insurance, professional firms, and financial institutions across the US, which has become a significant trend in the market. Moreover, insurance programs are conducted by insurers to meet the needs of business segments with unique risk profiles, and the market has experienced a rapid increase in demand for both comprehensive and custom-designed specialty insurance. This, as a result, is accelerating the market growth in this region. Furthermore, companies such as Munich Re Specialty Insurance and American Modern are actively hiring program administrators (PAs) & managing general agents (MGAs) to expand their specialty insurance offerings and provide customers with access to high-quality and flexible coverage options. Contrarily, advancements in specialty insurance product lines and an increase in small & medium enterprises are expected to provide lucrative opportunities for the market in the upcoming years.

Segmental Analysis

The global specialty insurance market share is segmented based on type, distribution channel, end-user, and region. 

• On the Basis of Type

Based on type, the global specialty insurance market is segregated into Marine, Aviation, & Transport (MAT), Political Risk & Credit Insurance, Entertainment Insurance, Art Insurance, Livestock & Aquaculture Insurance, and Others.

The Marine, Aviation, & Transport (MAT) insurance segment is the highest contributor to the market and is estimated to grow at a CAGR of 8.3% during the forecast period. MAT is further segmented into Inland Marine and Ocean Marine. Additionally, the ocean marine is further segregated into Cargo, Hull & Machinery, Marine Liability, and Offshore Energy Insurance. The rise in expenditure on international airlines contributes to the growth of the specialty insurance market. Furthermore, increased demand and awareness toward marine insurance among ship owners, cargo owners, and charterers facing huge losses such as damage caused to ships, cargo vessels, and terminals is another major factor that propels the specialty insurance market growth. Furthermore, massive development of airports and expansion of the transport industry, which involves automated baggage handling and self-check-ins, is expected to foster the market growth in the coming years.

The Art Insurance segment is the fastest growing. Specialty insurance usually provides flexibility in designing the policy based on partial or complete loss and additional coverages such as exhibition coverage. This considerable flexibility in choosing a customized approach propels the specialty insurance market growth. Furthermore, the art insurance coverage often includes multiple classes of private collections such as collectibles, wine, antiques, musical instruments, comic art, sports memorabilia, rare books, stamps, and coins. Moreover, insurers assign individual underwriters and seasoned insurance professionals with training in fine art while calculating premiums and providing claim settlements. This, as a result, accelerates the demand for specialty insurance in the market.

The Political Risk & Credit Insurance segment is the second largest. Increased geopolitical tensions, commodity–price volatility, political violence, and separatist movements augment political risks globally. In addition, uncertain government action, political unrest, and economic turmoil are significant factors accelerating the demand for specialty insurance. Moreover, independent agents and direct sellers are the influential intermediaries delivering political risk & credit insurance coverages in the market. Furthermore, the rapid expansion of new geographic markets, increase in commercial threat to the trade, and surge in small & medium enterprises globally boost the growth of this segment.

• On the Basis of Distribution Channel

Based on the distribution channel, the global specialty insurance market trend is bifurcated into Brokers and Non-Brokers.

The Broker's segment is the highest contributor to the market and is estimated to grow at a CAGR of 9.4% during the forecast period. Insurance brokers or agents are authorized to sell customer insurance policies with a registered license. It acts as an intermediary between insurers and customers by comparing the best deals and offering specialty insurance solutions from several insurers available in the market. Furthermore, this segment focuses on different areas & mentioned perils in the policy and provides multiple options and alternatives for specialty insurance coverage. Moreover, it offers various specialty insurance coverages in bulk and flexible coverage options to individuals and businesses. Brokers provide ranges with more stable premium rates and calculate premiums based on identifying potential causes of loss and damages, which drives the market's growth.

The Non-Brokers segment is the fastest growing. Non-brokers are considered core providers of specialty insurance policies. This distribution channel explores new avenues of an innovative and attractive range of distribution techniques. It leverages multiple channels for distributing its specialty insurance services to target customer segments in the market. By reducing advertising costs, avoiding overhead expenses, and building long-lasting customer relationships, non-broker or direct selling is a cost-effective process for distributing specialty insurance directly to customers. Direct selling attracts many customers via social media sites and emails. Thus, these are the primary growth factors for direct sales of specialty insurance.

• On the Basis of End-User

Based on end-user, the global specialty insurance market is divided into Businesses and Individuals.

The Business segment was the highest contributor to the market and is estimated to grow at a CAGR of 8.8% during the forecast period. The commercial or business end-use segment includes coverage against the loss arising from damage to the property, employee injury, and employer liability. It has ranges for various industrial sectors, including construction, manufacturing, telecom, textiles, and logistics. The specialty insurance under this segment is usually covered for marine, aviation, & transport (MAT), political risk & credit insurance, and entertainment insurance. The rapid expansion of new geographic markets and increased commercial threat to the trade propel the specialty insurance market growth. Furthermore, developing businesses to supply goods and services globally is expected to provide immense opportunity for the specialty insurance market. Moreover, the rapid expansion of small & medium-sized companies seeking to expand their offerings worldwide is expected to boost the specialty insurance market growth in the coming years.

The Individual segment is the fastest growing. For the individual segment, specialty insurance providers offer detailed and unique coverage solutions depending on customer needs. Specialty insurance premiums for personal coverages are higher and involve a long claim and underwriting process. The premiums for this segment are highly flexible depending on the needs and preferences of an individual. Insurers provide more flexibility than other plan options and benefit plans designed to meet individual needs. Therefore, these are the primary growth factors for specialty insurance among individuals.

Recent Developments

• June 2022 - Zurich Insurance Group (Zurich) has agreed to sell its legacy traditional life insurance back book in Germany to Viridium Holding AG (Viridium), a leading specialist in managing life insurance portfolios.
• June 2022 - Zurich Insurance Group (Zurich) is digitalizing its International Programs business using state-of-the-art technology to streamline stakeholder interaction globally. The transformation of the Group's International Programs workflows will significantly enhance the customer and broker experience and allow for a more efficient, seamless, and sustainable collaboration.