Pricing discipline is becoming increasingly important for property and casualty (P&C) insurers operating across the Asia Pacific region in light of intense competition and robust premium growth, according to industry specialists.
Speaking at a seminar organised by Saudi Re in Kuala Lumpur, Malaysia recently, insurance and reinsurance industry experts from across the Asia Pacific discussed growth prospects in the region’s insurance markets.
Focusing on the P&C sector, Vice President – Senior Credit Officer at Moody’s Investors Service, Qian Zhu, explained that premium growth in the region’s P&C sector continues to be robust and still exceeds that of other regions on the back of economic growth witnessed across the Asia Pacific, rising wealth, and the ongoing need to build infrastructure.
Furthermore, it was noted by Zhu that P&C insurers in the region are increasingly looking at new growth drivers outside of motor business, and, there is evidence of an increased need for pricing discipline as companies look to defend underwriting margins in a very competitive landscape.
For insurers and reinsurers, the Asia Pacific region holds great opportunity to drive premium growth, with the region being home to some of the lowest levels of insurance penetration in the world. However, a lack of local knowledge and adequate risk data has, in respects to certain perils and areas, been a hindrance to the uptake of insurance and subsequently the development of a robust insurance market in these risk areas.
The challenge for re/insurers is to develop solutions that are not only effective but also affordable and sustainable for some of the world’s poorest, who are often the same people that are most vulnerable to the devastating impacts of natural catastrophe events.
In the life insurance space, penetration also remains low across the Asia Pacific, although this protection gap, combined with a growing middle class means that there is long-term demand for life protection, explained speakers. Zhu highlighted the recent experience in China, where life insurance premium has increased by 16% in H1 2019 when compared with the same period in 2018.
Other topics discussed during the seminar, which brought together over 40 market participants representing regulators, insurers, reinsurers, and brokers, include the potential upscaling of the takaful business, and also the development of capital modelling and its impact on insurer decision making.