With the Asia-Pacific region’s contribution to global GDP increasing, it is positioned to play a vital role in driving growth within the global insurance industry, according to the latest APAC Market Report from Gallagher Re, a reinsurance broker.
This report provides insights into the diverse insurance landscapes across the Asia-Pacific, where each market faces its own regulatory challenges and broader regional economic influences.
It also examines economic shifts, changes in regulatory frameworks, and advancements in technology, highlighting how these factors are influencing market trends and testing insurers’ capacity to adapt throughout the region.
“Asia-Pacific’s dynamic economic landscape presents both challenges and opportunities,” said Roshan Perera, Head of Strategic Solutions APAC, at Gallagher Re.
“Despite challenges, the region’s insurance industry shows strong growth potential, particularly in accident and health, cyber insurance, and electric vehicle (EV) coverage. The broader economic recovery is also driving demand for innovative risk solutions.”
The Asia-Pacific (APAC) region’s cyber insurance market has been expanding rapidly, with annual growth estimated near 50%.
By January 1, 2024, the APAC region accounted for roughly 7% of the global cyber insurance market, underscoring its growing impact on the industry. This swift expansion reflects a heightened awareness of cyber insurance as a critical element in business risk management across the region.
Demand for cyber insurance has particularly increased in countries like Malaysia, Singapore, Australia, and New Zealand, as regional cyber threats become more prevalent. Insurers are responding by developing specialized cyber insurance products and partnering with cybersecurity firms to deliver comprehensive risk management solutions.
The APAC region is particularly susceptible to natural disasters, including earthquakes, tsunamis, typhoons, floods, and hailstorms. Increasing property values in high-risk areas are pushing natural catastrophe losses higher, according to the report.
So far in 2024, the region has been impacted by major natural events such as Japan’s Noto earthquake and Taiwan’s Hualien earthquake.
Recently, Typhoon Yagi resulted in approximately USD 400 million in insured losses in Vietnam, with total estimated losses reaching USD 1 billion across the Philippines, China, Vietnam, and Laos.
“We are actively collaborating with markets to develop solutions that address these risks and create new, innovative products such as parametric insurance, catastrophe bonds, microinsurance, and alternative risk solutions,” Perera added. “In a rapidly changing world, having effective risk solutions to assess and quantify catastrophe risk is crucial.”
According to the report, stricter terms and rising costs from the hard market have placed significant financial strain on all cedants.
“Whilst reinsurers are likely to remain cautious, especially around the frequency and severity of losses, the reinsurance markets appetite for growth is encouraging with signs of competition beginning to return,” Perera continued.
The report concludes that as global economic activity increasingly shifts from developed economies in Europe and North America to the APAC region, APAC is expected to maintain its crucial role in fuelling growth within the global insurance sector.
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