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Asia Insurance Market Report 2016


With 2016 under way, the global insurance marketplace appears to be heading in the general direction of soft pricing, reflecting insurer capacity, competition, and relatively low catastrophe losses, according to the “Asia Insurance Market Report 2016.”

However, industry developments, including recent earnings announcements, executive leadership changes, and re-underwriting at several companies bear watching. Macro dynamics such as global economic, political, regulatory, technological, and environmental developments will also continue to affect the industry throughout the year.

• An increase in overall Employee Health and Benefits (EH&B) rates throughout 2015 due to increasing loss ratios, rising health care costs, and medical inflation, which is outpacing general inflation. Employers are looking at cost-containment measures through health and wellness programs.

• Rates for non-catastrophe-exposed property remained stable or decreased in most countries in the region, due to good loss experience. Catastrophe-exposed property insurance is readily available and the overall rates remain stable.

• The Tianjin explosion in China, this past August, will have a significant impact on the marine markets, with some estimates citing total potential losses to be in the area of US$6 billion. In addition, lower pricing in the oil, coal, iron ore, and steel industries have resulted in reduced insured values, thereby impacting premiums. Despite all this, underwriters view Asia as a significant business opportunity.

• Awareness of trade credit and political risk insurance continues to grow. The economic slowdown has led to increased levels of payment defaults and insolvencies, with insurers suffering more losses, especially in China. The slowdown is expected to affect other countries in the Asia region; it is also expected to be broad based, affecting retail, manufacturing, and commodity prices (especially in Indonesia). Higher unemployment is also anticipated.

• The overall market for the financial institutions line remained competitive in 2015, with this trend expected to continue into 2016. India was an exception to this trend due to limited market capacity and to the fact that only four public sector insurers are underwriting this line of coverage. Poor loss experience has driven most global and private insurers away and, as a result, rates and deductibles have increased.

• Aviation market conditions remain relatively soft. Overcapacity is the key driver with very few underwriters withdrawing, and many maintaining their market presence despite their inability to make a profit. Cyber risk is a new area of concern for airlines, following the recent attacks on LOT Airlines. The airline community is increasingly at risk of cyber-attacks that could pose significant safety issues and force carriers to ground their fleets to protect passengers, causing major financial damage.

About the Asia Insurance Market Report

Through data and analysis, the “Asia Insurance Market Report 2016” provides a snapshot of current insurance market conditions and risk trends across major lines of coverage in 12 different countries and markets across the region, as well as various specialty sectors. The report reflects the experience of Marsh insurance professionals who work daily with the global insurance marketplace and provide clients with risk management advice.