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Weak currencies dent Asia-Pacific reinsurance spend

Reinsurance premium spending in the Asia-Pacific region has fallen sharply, due partly to key currencies dropping against the US dollar, according to Marsh subsidiary Guy Carpenter.

The global reinsurance broker’s Asia-Pacific Catastrophe Report says weaker currencies have extracted $US315 million ($368 million) of reinsurance premium spending over the past year.

Growth in catastrophe limits has lagged behind the region’s rapid economic expansion.

“In fact, this picture is more extreme in the emerging markets where insurance penetration continues to be modest,” Guy Carpenter says. “The problem of how to bridge this gap remains unsolved.”

It says the industry must find ways to spur reinsurance demand and support the region’s economic growth by raising awareness of catastrophe risk management.

Nearly 6% of regional catastrophe limit purchased is sourced from alternative capital, including collateralised vehicles. Japan and Australia dominate this segment.