Asia's insurance industry will take a hit from the economic slowdown in China and Europe, but stimulus measures such as infrastructure spending by Asian governments offer a ray of hope, analysts at Swiss Re Group say. "Slowing GDP growth will be a drag on both life and non-life insurance demand in Asia," said Clarence Wong, Asia client markets director of Swiss Re. "If Asia slows down because of Europe, it will necessarily affect the insurance business in Asia." The weakening demand in Europe would mainly hurt the maritime, aviation and transport (MAT) insurance business, Wong said. If Asia's gross domestic product declined 1 per cent, insurance premiums in the region would fall 6.7 per cent, he said. "There is a high sensitivity to GDP growth in Asia's insurance industry." Asia's GDP would fall 1 per cent if both Europe and China suffered a severe downturn, Swiss Re chief economist Kurt Karl said. "That is a very hard landing for Asia." Karl assigns a 30 per cent probability to a severe European downturn, while Wong says there is a 25 per cent chance of a hard landing in China, which he defines as GDP growth of 4 to 5 per cent. "There are four areas where China is particularly vulnerable. These are possible triggers that can lead to a hard landing of the economy," he said. Wong said these four areas were trade, inflation, the property market and local government debt. A severe economic downturn would occur in Europe if the euro collapsed and euro-zone countries went their own way, which would cause a 6 per cent GDP decline in the euro-zone economy, Karl said. Wong, however, said many Asian governments including Hong Kong were expected to launch fiscal stimulus or infrastructure projects to boost growth, which would benefit demand for non-life insurance products. "There are lots of infrastructure projects on the shelf that can be frontloaded by the Hong Kong government," he said. "Investment in infrastructure will remain a key growth driver and opportunity for insurance." China is one of the fastest-growing insurance markets in the world with an average annual growth rate of 25 per cent in terms of total premium income, according to a report by insurance broker and risk adviser Marsh.