Regional insights


The current market environment for insurance buyers in Asia-Pacific (APAC) is challenging. While we are starting to hear of a slight easing of pricing in the region, this has come after an extended period of premium increases which many clients have resisted and challenged. In response, organizations who have them are increasingly turning to their captives. Indeed across the region, the total Gross Written Premium (GWP) in captives under Aon’s management has increased by 23% in the last five years.

Recent renewals have also seen many clients reducing limits and increasing retentions to maintain program costs that matched prior year levels. Our data shows captive net aggregate retention is up 46% in the region since 20181. This can be a successful strategy for those organizations with a well-managed captive that has considerable data on its claims history.

Increasing rates and reduced capacity have been experienced across most risk classes in the region. In Australia, for instance, there has been an increase in Directors’ and Officers’ claims, driven by the 2018/19 Royal Commission into misconduct in Banking, that led to a severe capacity crunch and increased pricing.

And in the wider APAC region, natural catastrophes such as floods, wildfires and cyclones are again expected to cause significant damage in 2021. These extreme weather events are one reason why Property Damage and Business Interruption (PD/BI) has been hit particularly hard by rate increases and capacity reduction. Captive GWP for this line is up 60% since 20162 in the region, in line with the increase in market rate and with a higher number of captives underwriting PD/BI, as many organizations have found coverage in the primary market to be prohibitively expensive.

Increase in enquiries

While we have mainly seen increasing retentions on existing programs as opposed to the wholesale rush to establish new captives in the region, captive enquiries have increased significantly this year - a strong indicator of the future pipeline. We are processing new captive applications in Singapore, forming protected cells and delivering feasibility studies from Japan to Hong Kong to Australia.

India and China are relatively immature as captive markets, however enquiries are starting to flow as risk managers from these countries seek to fully understand how a captive can be an effective part of their risk management program and potentially reduce their Total Cost of Risk in response to hard market conditions.

The focus for existing captives in the region remains on more traditional risks such as PD/BI, General Liability (captive GWP up over 500% since 20163) and Marine Cargo, but there are signals that the focus in the future is likely to expand beyond this. Some of the global benefits networks are increasing their reach around APAC and a number of insurers are keen to introduce elements of global benefits programs to existing P&C captives.

Regarding the reduction in capacity, for instance, we are seeing an increase in enquiries from coal companies in particular around risk retention vehicles and mutual insurers to retain the risk of coal mining and exploration that is understandably becoming harder to place in the commercial market. Additionally our 2021 Captive Benchmarking Survey indicates a significant increase in captive utilization for Cyber globally, and though we are not yet seeing much of this in APAC, we expect captive owners in the region to follow suit over the next few years.

Alternatives to primary markets

In addition to captives, we have noticed more enquiries for mutuals and for protected cells, as risk managers look to access reinsurance capacity.

We are also seeing an increase in alternative risk transfer mechanisms such as insurance-linked securities (ILS), in particular Asian re/insurance companies using ILS to access the capital markets through Singapore, and more recently, Hong Kong.

The latest statistics from Business Insurance show that the number of captives in the APAC region grew by about 3% between 2019-204, and we expect to see this number increase over the next couple of years.


1 Aon’s 2021 Captive Benchmarking Survey

2 Aon’s 2021 Captive Benchmarking Survey

3 Aon’s 2021 Captive Benchmarking Survey

4 Business Insurance 2021 and 2020 Captive Managers and Domiciles Rankings + Directory

Alastair Nicoll

Regional Director, Asia-Pacific Captive and Insurance Management Aon

Regional insights

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