Gallagher Re has published its 2024 Asia Pacific Market Watch, delivering insights into the region’s insurance industry trends, gathered from both internal client advocates and publicly available data sources.
Covering 14 developed and emerging markets, the report highlights the challenges and opportunities facing insurers in the Asia-Pacific region.
The reinsurance broker highlighted key influences on market dynamics, including regulatory evolution, economic trends, and advancements in technology, which collectively impact insurers' adaptability and resilience.
Despite significant challenges, the Asia-Pacific region shows growth potential, particularly in accident and health, cyber insurance, and electric vehicle (EV) coverage.
Economic recovery is increasing demand for innovative risk solutions, while the ongoing shift in global economic activity towards Asia-Pacific continues to position the region as a central driver of global insurance industry growth.
Digital and technological advances have further supported sector growth in accident and health insurance, cyber insurance, and motor insurance, specifically for EVs. Demand for cyber coverage has increased in markets such as Malaysia, Singapore, Australia, and New Zealand in response to rising cyber threats.
APAC’s cyber insurance sector is growing at an annual rate of 50%, representing 7% of the global cyber insurance market as of January 1, 2024.
Motor insurance continues to dominate APAC’s non-life segment, accounting for 41% of premiums, with EV insurance receiving heightened attention due to recent growth in EV sales. Countries including Taiwan, Singapore, and China are now developing regulations specifically for EV-related insurance products.
Accident and health insurance, which makes up 11% of non-life premiums, is also expected to grow, driven by increasing awareness of wellness and expansion within the insurtech sector.
Inflation has impacted the non-life insurance sector across APAC, especially affecting motor, property, and medical insurance in primary markets. Insurers in deregulated markets have adjusted rates to keep up with inflation in claims costs, while those in tariffed markets, such as Indonesia and the Philippines, have faced pressure on profits as pricing lags behind rising costs.
This disparity has created a gap between primary insurance and reinsurance, with reinsurers struggling to match rates in tariffed markets. Capacity reductions for proportional treaties in the reinsurance sector, coupled with increased costs in a hardened market, have added financial strain for cedants at renewals.
However, with underlying inflation now stabilizing, insurers and reinsurers are more confident in their ability to price for inflation in short-tail lines.
Asia-Pacific remains highly vulnerable to natural catastrophes, including earthquakes, typhoons, tsunamis, and flooding. The rise in property values in high-risk urban areas, such as in China and India, has driven the increase in natural catastrophe losses.
Regulatory bodies are responding to climate-related risks, with measures to promote a low-carbon economy, which could have broad implications. In Malaysia, the regulator BNM has published guidelines for a 2024 Climate Risk Stress Testing Exercise for financial institutions, with submissions due in 2025.
Singapore’s parliament has also mandated climate-related reporting, aligned with IFRS’ ISSB standards, beginning in 2025.
Notable natural catastrophe events in 2024 include the Noto earthquake in Japan in January, with insured losses estimated at $1.2 billion, and the Hualien earthquake in Taiwan, with approximately $1 billion in insured losses.
Typhoon Yagi also resulted in $400 million in insured losses in Vietnam, and around $1 billion across the Philippines, China, Vietnam, and Lao PDR.
Regulatory advancements in the APAC region are showing progress with IFRS 17 implementation, although timelines differ across jurisdictions. South Korea, Hong Kong, Malaysia, Singapore, Australia, and New Zealand introduced IFRS 17 in January 2023, while other markets have extended deadlines to 2025 and beyond. Solvency regimes are also evolving across the region, with Hong Kong RBC introduced in 2024, Korea ICS in 2023, and China-ROSS II in 2022.
Australia’s APRA has aligned its capital framework with IFRS 17, and Japan is expected to implement a Solvency II-type regime by 2025. Markets such as India, Taiwan, and Vietnam are also preparing for new accounting standards, adding complexity to the regulatory landscape and requiring insurers to strengthen data, capital, and risk management capabilities.
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