Asia is growing, but remains vulnerable
This year’s Singapore International Reinsurance Conference has attracted more than 2,800 delegates, a record attendance for an event that is growing in importance in the international reinsurance calendar.
It also highlights the continued significance of Asia Pacific as an industry growth engine, as well as Singapore’s increasing prominence as the region’s reinsurance hub.
Reinsurance GWP written in Singapore has tripled over the past decade to $21bn, according to the local regulator, representing annual average growth of 13.6 percent.
In today’s edition we highlight several indicators of a bullish outlook for this continued growth, including news that the Lloyd’s Asia platform is set to grow its premium volume beyond $1bn for the first time this year.
This follows expansion at a compound annual growth rate of 8 percent over the past six years.
Tokio Marine Kiln, a significant Lloyd’s player, has also revealed ambitious plans to double its presence at Lloyd’s Asia by 2027.
In today’s edition we also hear from Roland Eckl, regional head for the world’s largest reinsurer Munich Re, who highlights how Asia is a vital growth engine for the company.
These signals all paint a positive picture of the growth opportunity for reinsurers in the region. But as well as growing, Asia also remains vulnerable.
Many carriers remain dependent on reinsurance, particularly those in developing markets in Southeast Asia, where the scale of market correction over the past 18 months will have come as a shock.
Reinsurance remains a critical tool for reinsurers in the region, particularly those in more developing markets whose business models depend on it.
The good news for them is that discussions continue to point towards more stable renewals in the region in 2024, both at 1.1 and beyond.
Early indications suggest the dialogue remains positive with no major shifts expected in pricing and terms, for the majority at least.
There are signs that some primary carriers are adapting their approach, taking on board the shift in market dynamics that has occurred over the past 18 months. One commentator highlighted to this publication how these carriers are now increasingly seeking to become risk aware and better understand their cat exposures, in the knowledge they can no longer transfer them through (comparatively) cheap reinsurance.
Over time, this should better position them to proactively manage their portfolios, reducing their traditional reliance on reinsurance for these frequency events.
There remains another challenge for the region – one Munich Re’s Eckl describes as the biggest of all. That is closing the protection gap.
Risk education underpins this objective as well. All stakeholders – from governments, to primary carriers, to end consumers – would benefit from being more risk-informed. The reinsurance sector can play a central role in sharing its knowledge to create more resilient and informed communities.