Steady economic momentum across Asia-Pacific economies is driving demand for insurance and benefiting the sector, according to Moody’s.
The region’s economic growth, led by China, has generates more need for insurance, the global credit ratings house said in a report titled “Insurance – Asia Pacific: 2018 Outlook”.
“The solvency positions of insurers across Asia-Pacific remain solid despite increasing capital requirements, while product margins and asset liability management have improved,” said Qian Zhu, vice president and senior credit officer at Moody’s.
“The insurers have also adapted to low interest rates by shifting to less interest-sensitive products and increasing their allocation to higher-yielding non-traditional assets, although for some – such as Chinese life and property & casualty (P&C) insurers – the latter has resulted in rising asset risk.”
According to the report, underwriting performance remains stable across the region. There was a worsening loss ratio for Chinese P&C insurers following the liberalisation of motor insurance pricing, but that was offset by the improvement in expense ratios on the back of the regulators’ efforts to curb excessive acquisition costs.
The report also drew attention to the effect of rapid technological advancements to the insurance sector. The deeper adoption of technology has introduced a fundamental shift in the industry’s business models, as well as the delivery of insurance products, the report said. Accordingly, technology will ease claim processes, as well as widen insurers’ customer bases and distribution channels.
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