The Asia Pacific property insurance industry is expected to grow to $141.8 billion in 2027 from $92.3 billion in 2023, at a compound annual growth rate of 11.3% in terms of written premiums, according to a report.
The projected growth will be supported by increasing demand for policies covering natural catastrophic (natcat) events, infrastructure project investments, insurance product innovations, and regulatory developments, according to a latest report from data and analytics company GlobalData.
The report shows that property insurance in APAC is focused on the top three markets, namely Australia, China, and Japan.
The countries are estimated to account for a total share of 76.0% of written premiums in APAC in 2023.
GlobalData insurance analyst Manogna Vangari said APAC insurance property growth is expected to outpace global growth of 6.5% between 2023 to 2027.
This is driven by disciplined underwriting practices and frequent natcat events leading to a spike in premiums for fire and home multi-risk property insurance classes, Vangari said.
China is the leading regional market, accounting for 35.3% share of the 2023 APAC written premiums, with a strong growth outlook from this year until 2027.
China’s property insurance market is expected to grow at a CAGR of 14.4% over the next five years due to an increase in demand for natcat-covered policies and positive regulatory developments.
The role of parametric insurance in China is projected to gain traction beyond agriculture as an affordable and sustainable form of insurance, GlobalData noted.
In April this year, the China Banking and Insurance Regulatory Commission advised all insurance companies to expand their agricultural insurance coverage and products.
The notice also urged companies to improve the efficiency of agricultural insurance underwriting and claim settlement, as well as research and develop personal insurance products that meet farmers’ needs.
Since April, insurers have expanded parametric insurance from agricultural insurance to earthquake insurance, business interruption insurance, renewable energy insurance against weather risks and insurance against tropical cyclones, according to Vangari.
Japan is the area’s second largest market, accounting for 25.1% share of 2023 written premiums. Japan’s property insurance market is expected to post a CAGR of 9.1% over the next five years.
Japan’s growth is supported by the increase in fire insurance premiums amid a rise in climate risks that will drive property insurance growth.
Japan will also benefit from the growth of the construction and energy sectors, as well as from investments in large infrastructure projects, GlobalData said.
Meanwhile, Australia, the third-largest regional market, posted a 156% share of APAC’s written premiums this year.
Over the next five years, Australia’s property insurance premiums are expected to grow at a CAGR of 11.7% supported by the rise in fire and home multi-risk insurance premiums.
The three largest markets are followed by India and New Zealand, with a respective market share of 9.7% and 3% of APAC’s 2023 written premiums.
While the construction and energy sectors’ growth and the rising premium prices will support property insurance growth in the region, portfolio adjustments to limit high severity loss exposure and maintaining profitability must still be a key focus for APAC property insurers, Vangari said.
