Pricing in the APAC reinsurance market in 2024 is stable due to adequate capacity, reversing from the hard market conditions of 2023, which were characterised by price increases and tighter renewal terms, says Fitch Ratings.
However, reinsurers’ increased appetite for taking on catastrophe risk, influenced by an orderly retrocession market, may lead to heightened risk-taking and a subsequent increase in exposure to potential losses.
Fitch believes maintaining market share while prioritising rigorous risk selection and disciplined pricing is crucial for reinsurers to sustain profitability amid increasing competition and ongoing uncertainty from regulatory developments, climate change, and economic risk.
Climate change
Climate change presents a growing and substantial threat in APAC, given the region’s vulnerability to natural disasters. The increasing frequency and severity of extreme weather events are likely to amplify reinsurance claims, potentially disrupting the recent stability in pricing. Fitch believes reinsurers will maintain a cautious approach to natural catastrophe protection by setting strict limits and upholding prudent underwriting standards.
Asian reinsurers’ capital has remained commensurate with their business profiles, based on the available statistics for selected reinsurers. The quality of shareholders’ equity is satisfactory and the equity level is increasing, supported by retained earnings.
Source: asiainsurancereview.com
Comments