Increased competition expected in Asia's property insurance market: Gallagher Specialty
Singapore dominates the offshore insurance coverage market.
Asia’s capacity has increased in the property insurance market, but increased competition is expected for desired risks. Thus, challenges persist in certain markets, such as below-technical rates and high exposure to natural catastrophes.
Clean renewal business may see flat to 5% increases, while certain loss-affected or catastrophe-exposed risks may see increases of 20% or more.
The recent earthquake in Japan’s Noto peninsula may impact terms and conditions for the insurance market, especially for earthquake risks requiring international capacity. Insured losses from the earthquake are estimated at $6.4b, with residential losses comprising two-thirds of the total. Some insurers have stopped writing new business in certain zones affected by the earthquake.
Taiwan’s rate increases at year-end have slowed but not been eliminated, with clean renewals still requiring around 5% increases. Low single-digit renewals were achieved through changes in policy terms and conditions, such as reduced coverage or increased retentions.
ALSO READ: January renewals ‘smooth’, demand for property coverage increases: Aon
Indonesia’s pricing has been highly volatile, with high double-digit rate increases, particularly for risks requiring offshore capacity. Loss-affected risks have seen increases of around 50%, with higher deductibles and sub-limits introduced.
In Korea, business is historically controlled by conglomerates, leading to deep polarization between risks absorbed domestically and those requiring international capacity. Clean small to medium business renewals have seen flat to 2.5%-5% increases, while loss-affected risks may see up to +/-15% increases.
Philippines’ NatCat loss-affected risks are becoming more challenging for local markets to cover, leading to an increased willingness among clients to consider international market rates and accept higher deductibles.
The Singapore insurance market remains the epicentre for capacity for risks requiring offshore coverage from domestic markets. There is a difference between terms required in London and Asian market hubs, with London serving global business and selectively pricing its capacity.