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Asian reinsurance market set for growth: Fitch

Regulatory reform in Asia may drive increased demand for reinsurance as primary insurers rethink risk management strategies and appetite, according to Fitch.

Asian regulators have implemented or are implementing a range of measures that would alter the operating and business climate, the ratings agency says in a new report.

“Legislative changes in Indonesia, Vietnam and India are trending towards more protectionism, with attempts to increase the percentage of insurance business to be placed with domestic reinsurers.

“Local reinsurers are being constantly challenged in their ability to improve their risk management sophistication and controls, to keep up with the upcoming surge in premium volume.”

Fitch also expects market competition to intensify, with several new reinsurers being set up in China.

The gap between insured losses and total economic losses from natural catastrophes improved last year, but Fitch believes “it is still far too wide”.

Many Asian nations have low insurance penetration, which Fitch believes provides solid growth potential, including in the relatively untapped Indonesian, Chinese and Indian markets.

Total insured losses in Asia improved to 19% of total economic losses last year, compared with 10% in 2014.