Asia-Pacific’s property and casualty (P&C) and life insurance industries are forecast to remain stable in 2019, a report by ratings agency Moody’s Investors Service revealed, citing solid capital levels and improved product offerings, amid rising asset risks.
According to the report, the insurance industry is faced with expanding asset risks due to higher investment in non-traditional assets and growing currency mismatches.
“Economic growth among APAC economies will moderate but continue,” said Frank Yuen, assistant vice president and analyst at Moody’s. “This, plus their aging populations, will support growing demand for long-term investment, health and retirement coverage.”
The demand for long-term life insurance is expected to remain strong, due to a growing middle class and a huge protection gap in many Asia-Pacific markets. However, these markets will also encounter a slowdown in life insurance premium growth, as insurers adjust their product mixes to comply with regulatory requirements, the report said.
Meanwhile, the Asia-Pacific P&C sector’s premium growth is predicted to remain robust and exceed that of other regions due to rapid economic growth and high demand for infrastructure.
“P&C insurers are also searching for new growth drivers from non-motor lines, and pricing disciplines are becoming increasingly important for defending underwriting margins amid intense competition,” the report said.
Insurers’ investment performance may encounter some pressure due to volatile economic and capital markets developments in 2019. However, the insurance industry will be strengthened further through stricter requirements for capital and asset liability management imposed by regulators. This allows the industry to absorb economic and geopolitical shocks.
“While the changes are expected to be gradual, insurers are stepping up their efforts to improve asset-liability management and internal risk management, as well as embed capital analysis in their daily product offerings and asset allocation decisions,” Moody’s said.
