Across Asia, market conditions were mixed, with renewal outcomes varying by line of business. Natural catastrophe property risks remained challenged. Financial Lines saw a general softening, says Aon in its "Q1 2024 Global Insurance Market Insights Report" released last week.
On Asia, the report says that despite a robust international insurer presence in the region, opportunities remained for new entrants, particularly in niche products such as Cyber, Crypto, and Transaction Solutions. Capacity was sufficient as new insurers began writing specialty products either directly or through MGAs (which allowed insurers to reduce their entry costs).
Reinsurers sought premium and retention increases through the January 2024 renewal cycle with increased treaty costs driving increases in the direct market.
Mr Paul Young, Aon’s head of Commercial Risk Solutions in Asia, said, “Market conditions remained challenging for natural catastrophe exposed property risks, where insurers continued to seek rate increases, as they are not positioned to absorb higher treaty reinsurance costs. The market for property risks that are not natural catastrophe exposed, and much of the balance of the market in general, has moderated or softened.
On 3 April 2024, a 7.4 magnitude earthquake struck the east coast of Taiwan. Damage assessments are still being undertaken. Taiwanese corporates, particularly in the technology and life sciences sectors, generally tend to purchase property damage and business interruption insurance. Due to the location of the quake, Aon anticipates moderate Property losses for insurers (and their reinsurers); these come after significant COVID pandemic claims and will further negatively impact profitability. If Business Interruption coverage is triggered, these losses could be significant given the tightness of supply chains and global demand.
Aon’s comments on market dynamics in Asia in the report include:
Pricing
Pricing varied widely based on product line and geography, with competition tending to pressure pricing downward, especially for risks with favourable loss histories. Flat renewal pricing was generally available except where exposures leaned toward property in natural catastrophe zones; in such cases, insureds experienced rate increases.
Capacity
Across the region, capacity was generally sufficient for most risks; however, challenging risk types and some geographies experienced capacity limitations, particularly for natural catastrophe-exposed property risks. Singapore saw new international market entrants focused on growth.
Underwriting
Underwriting was prudent as underwriters sought to differentiate risk quality, offering favourable terms mostly to preferred risk types. Underwriting was more conservative and stringent for US exposures and higher-risk profiles.
Limits
Overall, expiring limits were available on most placements. Some client-selected decreases were observed as clients sought premium savings. In scattered cases where insurers reduced limits, coinsurance was leveraged to fill the resulting gaps. Limit increases were available on preferred risks.
Deductibles
Overall, most placements renewed with expiring deductibles, with the notable exceptions of natural catastrophe property risks and client-selected deductible increases (to achieve premium savings). Deductible increase options were often declined by insureds because the premium savings were deemed incommensurate with the additional risk.
Coverages
Overall, expiring terms and conditions were available on most placements and in some geographies and products, broader coverages were available, often for no additional premium. Per-and polyfluoroalkyl substances (PFAS) exclusions were imposed on liability risks regardless of confirmed PFAS exposures.
Source: asiainsurancereview.com
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