Economic losses due to natural catastrophes in the region reached $67 billion last year, indicating a huge gap and growth opportunity for re/insurers
The increasing frequency of natural catastrophic events has created demand for reinsurance in the Asia-Pacific (APAC) region as domestic insurers seek financial resources to cover such massive risks.
This is according to GlobalData, which reveals that Asia-Pacific headquartered 24 of the top 100 global reinsurance groups, with a reinsurance premium share of 17.3% in 2019.
Climate volatilities, which have exacerbated risks from natural hazards, is a focus area for reinsurers. In 2020, losses due to natural catastrophes in the region were $67 billion; of which only 4.5% were insured, indicating a huge gap and growth opportunity for both insurance and reinsurance companies.
Manisha Varma, insurance analyst at GlobalData, commented: “Growing insurance markets, mandatory cession requirement in most countries and exposure to natural hazards such as earthquake, flood, wildfires and cyclones, supported the growth of reinsurance in the region.”
China and India are among the fastest growing markets for both life and general insurance. Mandatory cession regulation and expanding insurance industry has helped domestic reinsurers increase revenue in these countries. Consequently, Chinese reinsurers, China Re and China P&C, and Indian reinsurer, GIC Re, recorded double-digit growth during 2016-2019.
Singapore and Hong Kong have asserted their position as global reinsurance hubs driven by its well-established regulatory framework and presence of robust financial infrastructure. Leading global reinsurers including Swiss Re, Munich Re, Scor and Hannover Re have operations in these countries.
To provide optimal reinsurance coverage at affordable price, reinsurers are adopting catastrophe modelling technologies such as satellite images and real-time hazard maps. These technologies help in accurate risk assessment based on historical and near real-term weather data, thereby helping both insurers and reinsurers develop suitable cover.
Varma concluded: “Post pandemic economic recovery supported by resumption of infrastructure developments and growing insurance industry will support demand for reinsurance in the region over the next five years.”