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ECONOMY | 12.04.2023

MAPFRE Economics creates an index to measure the potential of the real estate market and its impact on the insurance industry in 43 countries

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  • The highest level of potential is found in India, followed by the Philippines and China
  • The Spanish market ranks 35th of the 43 countries analyzed

MAPFRE Economics, MAPFRE’s research arm, has published the report “Real estate markets and the insurance industry,” which shows the interconnections between the two sectors and provides data on the most significant indicators of the real estate industry that influence the development of the insurance industry. These include the housing stock and the mortgage balance, in addition to population projections, gross capital formation of private dwellings, disposable personal income, real estate transactions, housing prices, mortgage interest rates, and the credit gap of households, among others. “The level of development and maturity of the residential real estate market, and the degree of dynamism of the mortgage market are highly relevant factors in the performance of insurance activity,” states Manuel Aguilera, the General Manager of MAPFRE Economics.

The analysis centered on the residential real estate market for a set of eight countries, including Spain. In addition, MAPFRE Economic Research carried out a relative measurement of real estate activity potential first and then, based on this, of its significance for the insurance industry for a group of 43 countries. Specifically, the Indicator of Real Estate Potential for the Insurance Industry (IPIA) aims to assess the relative capacity of the insurance industry to transform the momentum from the real estate market into new insurance demand, based on an analysis of the performance of insurance demand in response to changes in disposable personal income.

The highest level of potential, measured using the IPIA, is found in India, followed by the Philippines and China. “In the case of India, the factor making the smallest contribution in the indicator of potential is that of gross capital formation in housing investment, although other economic and demographic factors improve the country’s position, especially the good performance of its insurance industry in response to increases in disposable personal income,” Aguilera adds.

At the bottom of the ranking lies Japan, which presents indicators that are typical for a very mature market with a shrinking population. It showed weak scores in all the sub-indices that influence the indicator. The lower percentile is rounded out by Romania, Greece, Italy, Finland, South Africa, Slovakia, Malaysia, Spain, the Netherlands, and Switzerland. In fact, Spain ranked 35th out of the countries analyzed.

You can watch the presentation of the report beginning at 4:30 p.m. (Madrid time) here