Across property and casualty (P&C) and life and health (L&H) markets in Asia, demand for insurance and reinsurance protection is rising, and this trend is expected to persist against a backdrop of climate change and inflationary challenges, according to Franz-Josef Hahn, CEO of Hong Kong reinsurer, Peak Re.
“The demand for insurance and reinsurance is increasing, and this is not going away,” said Hahn, in a recent interview with Reinsurance News. “We see the demand, even from China, from India, and the whole Southeast Asian markets and other South Asian markets, increasing. And this is not only on the industrial side, but also particularly on the personal side.”
With the exception of China, the population in emerging Asian markets is very young, and they have entirely different demands in the cycle than the ageing population.
This, explained Hahn, creates opportunities.
“Asia’s emerging middle class is underinsured. As they become more affluent, they prioritise protecting their health, wellbeing and finances.
“And so, P&C offers very important protection similar to life and health, and here is where the growth is coming from, and that demand will go on for a very long time,” said Hahn.
The CEO explained that both demand and opportunities in Asia are not linked to a dislocation of the market per se but exist because of the long-term development opportunity of emerging markets.
“The governments of all of the various countries in Asia, they have the challenge of how can I bring everybody who is in the lower part of the middle class society or even below, how can I bring them up? How can I build a momentum, which then enters into sustainable development, not only for the richest of the rich, but of a strong middle class society as the backbone of future growth and future wealth? And that’s constituting the opportunity, which we are looking at, and that’s lasting for the next couple of decades,” said Hahn.
Challenges often bring about opportunity, and during the discussion, Hahn commented on the difficulties of the inflationary environment, climate change, and other factors.
“Inflation is certainly a big challenge. Another challenge is how can we ensure that our clients can answer their clients’ demands, and how can we ensure that the industry is moving on as the world is moving on.
“We all understand, and this year more than before that entire industries are depending on the insurance and reinsurance capacity coming through. Because otherwise, we will see a lot of industrial and economic standstill. I think that’s a big challenge, and it’s a big responsibility we all have to be aware of. After all, we are all sitting in one boat, so nobody should say I can separate myself from the direct market or from what the clients need,” said Hahn.
“And then, of course, the mother of all challenges of today and tomorrow, is the climate change, and that’s not going away,” he added.
Climate change presents a real challenge for all parts of the world, but with Asia already being home to some of the largest protection gaps globally, there’s a real need for more capital.
But it’s not just within the natural catastrophe space that the gap exists, there’s also a large and growing pension, and health protection gap in Asia.
“That means, insurers together with us reinsurers, need to find solutions to capture the longevity, health, and then also P&C lines of business. We need to do a better job of developing an appetite, but normally the insurance industry doesn’t have that appetite. That will take time and it’s still very, very challenging.
“But, if we were to develop it much more, then we would need a lot more capital. Our offer needs to be attractive. The products which the industry must develop, have to be affordable, attainable, sustainable, and they need to fulfil the task,” said Hahn.