The outlook for the non-life market in advanced Asia-Pacific is positive, says Swiss Re Institute, as it notes the various actions taken by countries or territories to foster growth.
Singapore and Taiwan are looking ahead, releasing a Transformation Map and master plan for the re/insurance industry based on InsurTech and other innovations such as parametric solutions. Hong Kong is planning to position itself as the risk management hub for Belt & Road projects.
Swiss Re expects premiums in Japan to rise modestly in 2019, after upward adjustments to official GIRO rates in property and personal accident lines. There will likely be rate increases in property and commercial lines given last year’s heavy natural catastrophe losses. In Australia, the decline in compulsory third party (CTP) motor premiums is expected to be less of a drag, while property is expected to continue its robust growth.
Looking back on 2018, the report says that non-life premiums in advanced Asia-Pacific grew by 1.2%, having declined by 2% in 2017. The improvement was driven mainly by less severe contraction in Japan, where the premium decline slowed to 0.3% from almost 8.6% in 2017. This was on account of the largest insurers having reduced motor rates by up to 5% since the beginning of 2017.
The profitability of Japanese non-life insurers is expected to have declined significantly, with the three largest Japanese non-life insurers reported to have incurred record insurance pay-outs in the fiscal year 2018 due to natural catastrophe losses.
Premium growth in the other markets was robust, ranging from around 2% in South Korea and Australia, to 6% in Singapore. In Australia, strong rate increases in commercial lines lent support. Growth in personal lines was more muted given economic uncertainty, rising concerns about the housing market, and lower rates and refunds in compulsory third-party motor.
Profitability in the non-life sector will remain an issue due to strong competition and continuing low interest rates, these continuing to hurt investment returns.
Advanced insurance markets in the region include: Australia, Japan, Hong Kong, New Zealand, Singapore, South Korea, and Taiwan.