INSURANCE | Staff Reporter, Japan

APAC insurers' stable outlook highlights strong performance

The pandemic will still bring short- to long-term changes in the sector.

A generally robust capitalisation, steady product margins, and strong premium growth will sustain a stable outlook for the Asia Pacific insurance sector, a Moody’s Japan K.K. report said.

According to analyst Soichiro Makimoto, the sector still reported modest business and premium growth even with the pandemic-induced disruption, whilst persistently strong capitalisation balances increasing allocation to risky assets in a low interest rate environment.

However, the pandemic will still cause short- to long-term changes in the sector, including through rising health insurance awareness, changing social patterns, and digitalisation, adds Makimoto. In addition, insurers' premium base is anchored by long-duration existing policies, and new sales should rebound especially amidst rising demand for health insurance.

The sector is also rapidly adopting new technologies, such as face-recognition and e-signature techniques to broaden the range of policies that can be sold online. Similarly, ESG considerations are also progressively affecting insurers' investment and underwriting decisions, although exposure to legacy assets remains a drag.

Within APAC, Moody's maintains a stable outlook for P&C insurers in China, Japan and Korea, and for life insurers in China. Its outlook for life insurers in Japan, Korea and Taiwan remains negative, reflecting concerns over the impact of prolonged low interest rates and potential capital markets volatility.

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