The Asian reinsurance market experienced abundant capacity, sliding rates, and over-placement during the 2026 renewal season, mirroring the same broad theme seen across the global reinsurance market, AM Best noted in a recent report.
Despite downward pricing pressure, cedents maintained largely stable deductibles, using ceded premium savings to buy up higher-layered limits and back emerging lines with growing risk appetites, according to AM Best’s AsiaFocus: Resilience Through Transformation report.
While underwriting discipline remained resilient, competitive pressure is expected to continue into 2027 with ongoing rate softening on clean accounts.
In response, the report revealed, buyers are increasingly turning to buy-downs and frequency protection structures.
The market is also navigating emerging headwinds, including an expected Super El Niño driving severe weather events – like droughts, heatwaves, severe typhoons, and flooding.
For example, Typhoon Bavi, in July 2026, was one of the largest typhoons in recent decades, skirting northern Taiwan, then subsequently making landfall in eastern China and impacting Okinawa in Japan. The ultimate loss remains to be seen.
An additional trend seen over the year is the emergence of non-Asian-based MGAs acting on behalf of overseas reinsurers seeking access to Asian markets without establishing a local presence.
While this capacity has not materially disrupted market dynamics, early activity has been observed primarily in facultative and specialty lines, AM Best noted.
Looking at reinsurance renewals per country, in Japan, the April 2026 renewal saw another year of double-digit rate reduction in property XOL.
Property proportional treaties also benefited from improved terms, including up to five percentage points in ceded commission increases driven by excess capacity and improved underwriting results.
Looking ahead, AM Best believes Japanese cedents are better equipped to manage the cycle but are unlikely to raise retention further in this soft market. Instead, buyers aim to enhance earnings protection, showing growing interest in frequency products as alternatives to aggregate covers, which disappeared during the hard market.
According to the report, China is driving demand growth, fueled by economic expansion, overseas investments, and emerging sectors like green energy, electric vehicle supply chains, data centres, cyber risks, and overseas investments by both public and private enterprises is creating new protection needs across facultative and treaty markets.
Because demand in these evolving lines outpaces available capacity, reinsurers offering specialised underwriting expertise and product development support hold a distinct competitive edge over those competing strictly on price or capacity.
For Taiwan, the implementation of IFRS 17, with regulatory support, has enabled the country’s industry to convert one-off accounting gains into contingency special reserves, enhancing adjusted capital buffers for catastrophe risk management.
This decreased flexibility in catastrophe XOL purchasing and reinsurance program design, according to the report.
Similar to Japan, commercial fire profitability in Taiwan improved during the hard market via higher retentions, tighter terms, and rate increases.
As reinsurance softened, lower costs are expected to reach primary pricing with a lag; however, primary insurers will likely maintain underwriting discipline and leverage facultative reinsurance to recover from COVID-19 losses.
South Korea benefited from double-digit cost reductions for traditional property reinsurance following market softening that started in 2025, with cedents keeping retentions and coverage structures stable to capture rate savings.
While recent renewals were stable, the massive Coupang Logistics Center fire will test market discipline in upcoming cycles, AM Best noted.
At the same time, South Korea’s life and long-term non-life reinsurance segments continue to exhibit strong growth prospects, driven by IFRS 17 and K-ICS implementation.
These frameworks are reshaping insurers’ approaches to profitability and capital management, leading to increasing demand for coinsurance and other structured reinsurance solutions to alleviate solvency pressure.
