Early forecasts suggest that property category renewals at 1.1 in most Asia-Pacific markets are likely to push risk-adjusted rates into the lower single-digit range, with expectations that most of the significant change will come from renewals in 2023.
Sources he used Insurer all pointed to a more stable renewal on January 1, with only moderate increases for property and casualty insurance.
Gallagher Re Asia Pacific managing director Mark Morley told this publication that there is currently no indication of a shortage of renewal capacity in regions 1.1, which is largely focused on emerging markets in Asia, with the majority of mature market treaties renewing in level 1.4.
From a supply perspective, we’re in good shape, he said. We hope that this time the renewal will be more rational and predictable. From the conversations so far, it appears that this will be the case.
This is largely in line with the sentiment of the reinsurers we spoke to Insurer at the International Reinsurance Conference in Singapore, with the outliers being markets that have suffered losses in recent years. As reported in yesterday’s release, reinsurers have increased scrutiny on recent renewals in markets such as Malaysia and the Philippines due to increased cat losses.
Gallagher Re’s analysis shows that among the more mature markets in the region, South Korea’s property and casualty insurance market recorded a combined compound ratio of 103% in 2022, also due to elevated losses.
So far, a recurring theme throughout the conference has been the desire to increase the number of solutions regarding treasury risk pools. This comes as existing pools of countries consider creating a common reinsurance facility to enable a more efficient use of capital.
Morley said there is more interest in reinsurance solutions in the sovereign space. More broadly, sovereign customers have become more comfortable with basis risk, and there is an increase in demand and interest in how reinsurers can provide solutions to these challenges.
I feel that my determination in this process is greater than ever in my career. For me, progress is about making state funds available from a budget perspective. Now we see that this is a decisive step forward.
Ravi Menon, managing director of the Monetary Authority of Singapore, highlighted treasury risk pools as one of three forms of alternative risk transfer that the regulator wanted to encourage in Singapore, alongside ILS and captive solutions.
State-centric risk financing solutions are sometimes the most viable solution for countries to manage natural disaster risk, especially for countries with vulnerable communities who cannot afford privately funded insurance, he said.
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