What’s in store for Asia’s insurance industry in 2022?

Aon’s latest Asia Market Review reveals key areas of opportunities in 2022.

Emerging markets are poised to become global growth drivers, skyrocketing availability of data, advances in digital and mobile technology and rampant progress in analytics and artificial intelligence marks the end of 2021 for the insurance industry, according to Aon’s 2022 Asia Market Review: Managing Risk In Connected Asia.

The report also gives insight on what to expect from different segments of the insurance industry from property & casualty, cyber, health, cargo as well as managing total costs of insurable risks in different industry spaces.

A slow year is predicted for casualty insurance. However, rates are expected to flatten should no large losses occur in 2022. Aon advised that existing relationships in ‘difficult’ industries need to be maintained and built upon as no new insurer capacity seems to be on the horizon. Rates are expected to stay flat at +5%.

Asia logged no major property losses for both catastrophic and non-catastrophic events. However, regulatory judgements in Australia and the UK (which ruled in favour of assureds
on COVID-19 business interruption claims) could have a significant impact on 2021 renewal rates, especially in these territories.

Aon predict market differentiation in rate increases in the property segment will start to widen between heavy and light industries. Meanwhile, catastrophe rates will continue to weigh on international reinsurers, with focus on specific territories. Aon expects rate movements in nat-cat exposed property to be between +5% to +15%.

Rates for credit will remain flat. Inflation will lead to tightening monetary policies which will result in leveraged, weaker companies to struggle with increased finance costs.

A huge year is expected for cyber insurance, however market conditions is expected to remain challenging with no immediate or significant softening due to persisting global threats, although 
adjustments look set to be less severe than 2021. 

Despite these challenges, Aon predicts that demand will increase as various industries recognise key risks and view their policies as essential. Rate movements are expected to be between +15% to +75%.

Insurers in the health segment mostly responded to emerging needs in 2021 by developing digital services like virtual consultations, prescriptions, and support for employee wellbeing. Aon predicts that this year the easing of movement restrictions will increase utilisation levels for both inpatient and outpatient claims. Further increase will be driven by rising inflationary pressures. Meanwhile, COVID-19 healthcare costs will now transition to the private sector.

“The normalisation in utilisation patterns, emerging mental/musculoskeletal health risks, and the potential for a greater COVID-19 cost burden will fall on the private sector. This will require employers to carefully analyse their medical plans and employee needs, as cost pressures increase,” Aon said.

Aon also sees a growing market opportunity for insurers in the mergers and acquisitions (M&A) market. It expects the market to grow as more investors seek new opportunities in pharmaceuticals, renewable energy, technology and biotechnology.

Aon notes that claims notifications have become frequent in Asia, due to increase in claims associated with higher-value deals. Common claims were in relation to financial statements, tax issues, compliance with law, stock and inventory, as well as material contracts.

“There will likely be increased claims activity, fuelled by more insurance policies being placed and businesses looking to alleviate financial losses,” Aon added.

Aon’s chief executive officer for Asia Pacific Anne Corona said that traditional industry borders will fall away in 2022, with ecosystems and digital platforms that enable them will continue to influence the future of business. She adds that they believe the impact of the new normal will no longer be about offering the right product, but about advice and holistic solutions that will give companies greater clarity and confidence.

“The volatility of the last two years has brought the interconnectivity of risk into sharper focus, making risk management even more critical. Businesses are now more open than ever before to map current and underrated risks against their risk appetite early on, embracing better strategies to protect their organisations from volatility. We are also seeing the focus shift from event-based to impact-based risk assessments,” Corona said

You might also like:

How YAS MicroInsurance puts a price on non-fungible tokens

Singapore's top 50 insurance firms revealed a 17.22% increase in assets

Surer creates digital ecosystem for the siloed insurance industry