EUROPE – The European life insurance market’s growth to a record turnover is due in part to changing demographics, says European industry group the Comité Européen des Assurances.

The CEA says in a new report that market turnover rose to €551bn in 2004 and that total investments by insurance companies related to lie activity was €4.625trn at the end of that year – an increase of 5.6%.

“The growth observed in most western countries over the last few years is, among other things, related to the change in European demography,” said Jérôme Cornu, chairman of the CEA Life Statistics Working Group.

This is characterized by a decline in the active population (due to lower birth rates), an increase in the number of pensioners and longer life expectancy.

He told the latest CEA Executive Update: “This evolution will put the current pension system under pressure within the next 30 years and imposes an immediate and profound need for reform to achieve a sustainable pension system.

“The new pension systems under development emphasize the role of private insurance in the provision of pension revenue. This change is reflected by tax advantages for several life products in many countries.”

The CEA pointed out that 2004 tax changes in Germany, especially for products that give the option of a lump sum payment, have enabled new business to grow by almost 35%.

It said: “The introduction of the ‘Rürup’ pension product in early 2005 is expected to sustain the demand for life turnover in the future.”

And France’s launch of PERPs (Plan d’Epargne Retraite Populaire) in 2004 “sustained demand for similar pension products due to their tax advantages”.