APAC sees rising demand for cyber, EV insurance

Motor insurance remains the largest non-life segment, representing 41% of premiums.

The Asia-Pacific (APAC) holds strong growth potential, especially in accident and health, cyber, and electric vehicle (EV) insurance, according to Gallagher Re.

Gallagher Re has released the second edition of its APAC Market Watch, offering insights across 14 mature and emerging APAC insurance markets based on expert input and public data.

Increased demand for cyber coverage has been notable in Malaysia, Singapore, Australia, and New Zealand, with the regional cyber insurance market growing nearly 50% annually, reaching 7% of the global market as of January 2024.

Motor insurance remains the largest non-life segment, representing 41% of premiums, with EV coverage becoming a focus as EV sales rise. 

Regulators in Taiwan, Singapore, and China have started implementing EV-specific insurance regulations. Accident and health insurance, accounting for 11% of non-life premiums, also shows strong growth due to health awareness and InsurTech advancements.

Inflation has pressured the APAC non-life insurance sector, particularly in motor, property, and medical insurance. 

Whilst liberalised markets have adjusted rates, tariffed markets like Indonesia and the Philippines have seen a negative impact on profits. 

The reinsurance market has faced reduced capacity and higher costs, particularly in proportional treaties. 

However, general inflation has stabilized, enabling insurers and reinsurers to adjust pricing for short-tail lines.

Nevertheless, reinsurers remain cautious about potential loss frequency and severity.

The region is highly vulnerable to natural disasters, with major urban growth areas in high-risk zones. 

The increasing value of properties in such areas has been a primary factor in rising catastrophe losses, highlighted by the Noto earthquake in Japan and the Hualien earthquake in Taiwan, with insured losses of $1.2b and $1.0b, respectively. 

Typhoon Yagi also caused about $400m in losses in Vietnam and nearly $1b across the Philippines, China, Vietnam, and Lao PDR.

Regulatory shifts toward sustainability are also impacting insurers, with Malaysia’s central bank introducing a climate risk stress test due in 2025 and Singapore mandating climate-related reporting by the same year. 

IFRS 17 has been implemented in South Korea, Hong Kong, Malaysia, Singapore, Australia, and New Zealand as of January 2023, whilst other markets plan to adopt it by 2025 or later.

APAC solvency frameworks are becoming more harmonized, with notable updates including Hong Kong’s RBC, Korea’s ICS, and China’s ROSS II. 

Japan is expected to adopt a Solvency II-type regime by 2025, whilst countries such as India, Taiwan, and Vietnam are advancing new accounting standards and capital frameworks.