As insurers across Asia Pacific grapple with a continual frequency of catastrophe events driven by secondary perils, Marsh Re’s clients in the region are seeking holistic solutions centred around strong partnerships and the need to generate returns for shareholders, according to Tony Gallagher, CEO of the Asia Pacific Region, Marsh Re.
Reinsurance News met with Gallagher at reinsurance broker Marsh Re’s base in Monte Carlo during the 68th annual RVS, to discuss APAC re/insurance market conditions, client needs, and growth potential across the region.
Gallagher explained that conversations with clients at this year’s RVS highlighted a focus on the structure of their reinsurance programmes, and whether they’re fit for purpose moving into 2027.
“There are a lot of discussions around retention levels. And in our part of the world, covers such as aggregates are used to protect their earnings and capital events,” said Gallagher. “In Asia, this year, there’s been a continual frequency of events, whether that’s flood, earthquake to some degree, typhoons, and the majority of these are retained.”
Given these dynamics and in light of the restructure in 2023 around the retention levels of various treaties, Gallagher said that buyers are questioning whether there’s a better way to protect their portfolio to provide earnings protection to ensure stable results.
“That need for earnings protection is on their mind. And the various discussions I’ve had, they’ll talk about their natural perils allowance and how they’ve been using that maybe a little bit more than expected, or a little bit more than prior years. So, is there a better way to look at it?” he said.
“I find the meetings here in Monte Carlo are good because our clients are able to see the decision makers and their reinsurance partners, and really get first cut of what they’re thinking. And then we move, in terms of Asia, to the SIRC conference, and that’s when you then start getting closer to renewals and negotiations for 1 January,” he added.
Gallagher’s overall assessment of the APAC reinsurance market is that it’s multi-dimensional with cycles within cycles.
“What I mean by that is that you might have a hard market in one place, in a way that Thailand was a hard market last year, after the earthquake just before the renewal. So, there are markets within markets, which is around the results of that particular country or territory or portfolio.”
“And so, to me, the overall sentiment would be they’re looking to buy as a minimum what they have bought in 2026, and probably maybe looking to buy a bit more reinsurance. So, are they buying enough in terms of limit, and are they buying enough lower down?” said Gallagher.
The APAC CEO emphasised that it’s too simplistic to describe the “multi-dimensional” APAC market as soft, explaining that potential rate movements in 2027 may become clearer around the meeting of the industry in Singapore in November.
“In fact, this year’s RVS hasn’t been a conference around rates, it’s been a conference more around solutions and growth. How do insurance companies grow? How do reinsurance companies grow? Can you grow profitably in a soft market? Of course you can. So, then, where are we, and where can you grow? I think it’s going to be these decisions that the reinsurers need to navigate,” said Gallagher.
He continued: “The great thing about Asia is the region is a growing market. It’s got underinsurance, and so there will be a growth in the market naturally as the EPI is growing a bigger demand for the re/insurance, so there’s a natural growth going on there anyway, which is good.”
“It’s trying to select where you want to be and what you want to be, and which particular market and which particular line. Asia is predominantly a property cat market. Casualty, cyber is growing slowly, but it’s building, but it’s not the same momentum as it would be in a mature market.”
In terms of the main growth opportunities in APAC, Gallagher said that continental Asia, from Korea down through to Indonesia, is where he sees a lot of investment going on in terms of infrastructure and manufacturing, which leads to increased insurance requirements and subsequently greater demand for reinsurance.
“And then I see M&As continuing to take place. The countries where there are a number of smaller insurance companies, you start to see M&A, and increased reinsurance demand,” added Gallagher.
As the risk landscape in Asia and the rest of the world continues to evolve alongside client expectations, Gallagher sees Marsh Re’s clients “looking for holistic business solutions around how you help me protect my earnings, protect my ability to deliver returns to the shareholders.”
He continued: “It’s moved from a number of years ago where it was pure volatility protection, it’s now very much becoming a partnership around how do I generate returns to my shareholders.”
“And so, the reinsurance solution toolkit is expanding again.”
“It’s the same when we talk about the underlying insurance business and the changing nature of risk, such as electric vehicles and so on, and that means different things for reinsurance, too. And I think as an industry, it’s trying to keep pace with that changing nature of risk because it affects both insurance and reinsurance.”
