Demand for risk insurance in Asia 'steady' in 2023: Marsh

This is due to the expansion of the Asian market’s capacity for warranty and indemnity insurance

A report from Marsh revealed that a “steady” demand for transactional risk insurance solutions in Asia will remain and improve in 2023. However, the premium rates in the region will continue to drop from their previous elevated levels in 2021.

According to their Global Transactional Risk Report, this is due to the expansion of the capacity of Asia’s market for warranty and indemnity insurance despite being “underserved”, as well as increased competition generated by new insurance companies.

The report also said that there is an increase in tax insurance in the Asian market to mitigate the tax risk arising from mergers and acquisitions transactions (M&A) this year due to the region’s better understanding of the product and a growing insurer appetite “to insure Asian tax risks.”

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Meanwhile, the Global Transactional Risk Report also revealed that transactional risk insurance placements in Asia in 2022 remained “resilient” despite an overall “heavily weighed” M&A activity due to global macroeconomic and geopolitical pressures.

According to Marsh, the resiliency is caused by the continued stability of Southeast Asia’s M&A market and the strong Indian market. Because of this, the average premium rate for Asia increased slightly from 2.25% in 2021 to 2.32% in 2022.

“Overall, closed deal counts decreased only slightly — by 12% — compared to 2021’s record-breaking levels, total limits placed grew by 35.6% over the previous year,” the report added.