Insurance pricing in Asia stays flat amid declines in financial, casualty lines
Insurance pricing in Asia stays flat amid declines in financial, casualty lines | Insurance Business Asia
Insurance News
Insurance pricing in Asia stays flat amid declines in financial, casualty lines
D&O rates down from single to double digits
Insurance News
By
Kenneth Araullo
Insurance markets in Asia have experienced a period of stabilisation in terms of pricing, with the third quarter of 2023 showing a plateau in composite pricing, according to the latest pricing index from Marsh.
Property insurance rates in Asia exhibited a modest uptick of 2%, an increase which can be traced to selective rate reductions in markets such as China and Korea, counterbalanced by higher rates prompted by natural catastrophe risk in the region. Despite most domestic insurers posting profitable first-half results for 2023, there remains a degree of caution for the year’s latter half, spurred by recent extreme weather events in North Asia.
Those owning property in areas with higher catastrophe risk also underwent closer examination from insurers. With inflation’s descent from its 2022 zenith, insurers have been persistent in their demands for updated property valuations, reflecting sustained awareness of potential impacts on their portfolios.
Conversely, casualty insurance pricing exhibited a decrease of 2% over the quarter, reflecting the abundant capacity and competitive dynamic between international and local insurers. The reduced business activities have also been a factor in this dip. Insurers have maintained their meticulous approach to US exposures, informed by the substantial settlements and awards seen in that market.
Notably competitive were workers’ compensation and auto liability rates, with several markets within the region reporting decreases. Insurers’ attentions are increasingly focused on risks such as PFAs, bushfire liabilities coinciding with the onset of El Niño, product recalls, North American exposures, and the prevailing claims inflation landscape.
In the cyber insurance domain, the pricing held steady, mirroring a sector adjusting to heightened risk appetite and increased market capacity. Underwriters’ emphasis on robust cybersecurity measures has not waned, with scrutiny on coverage areas linked to war and current geopolitical tensions.
Despite a levelling of rates, the severity of ransomware and the sophistication of threat actors continue an upward trajectory. Data encryption and business interruption have emerged as significant loss drivers in the cyber insurance conversation.
“After years of increases, even a modest reduction in cyber rates will be welcomed by clients and in large part is recognition of the hard work they have done to improve their cyber resilience,” said Pat Donnelly, Marsh specialty and global placement president. “However, the property market – and property catastrophe in particular – remains challenging and is an area of focus of our work with clients.”
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