Geography Trends
Asia Pacific
Asia Pacific Q3 2021 Overview
See below for insights related to the landscape, market dynamics and claims dynamics in Asia Pacific, or select a geographies below to take a closer look.
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Asia Pacific Landscape
Across this diverse region, the general picture is of economic recovery as many countries shake off the worst impacts of the COVID-19 pandemic, but prospects are clouded by a number of factors. In some countries, relatively low vaccination levels mean that fresh waves of the virus still pose a major threat and may be met by strict lockdowns. Meanwhile, countries in the region which have achieved higher levels of vaccination, or which have been relatively successful in containing the virus, are attempting to transition to an ‘endemic’ stage where enough of the population is immunised that relatively high levels of infection can be tolerated, striking a delicate balance between public health and economic objectives.
As with other regions of the world, returning to economic growth in the wake of the pandemic has also brought major challenges in the form of supply chain disruption, energy shortages and fuel price rises. These concerns weigh particularly heavy in China, dampening prospects for its vast manufacturing industry, but naturally also extend throughout the region. In the insurance market, following a prolonged period of remediation efforts, conditions are improving – but in pockets. Rate movement in some areas continues to ease and particularly for the more vanilla occupancies and exposures, well-managed risks, and risks with a low Nat Cat footprint. Other areas such as Cyber, Professional, and risks requiring large limit capacity remain challenged. There continues to be a notable difference in local market conditions versus international market conditions.
Market Dynamics
Rates
The focus has shifted toward cautious growth, serving to decelerate rate increases. Key exceptions include Cyber and Financial Lines where conditions remain challenging.
Capacity Insurers are renewing existing capacity, but very little new capacity is entering the market to allow for expansion. Appetite is limited for undesirable risks and/or those requiring large limits.
Underwriting Underwriting rigor has increased as authority continues to transition to central teams. Starting early is key to achieving successful outcomes.
Limits Limits are stable for most products; however, insurers are exercising additional caution in their deployment of Natural Catastrophe (Property) and Cyber limits.
Deductibles There is a strong insurer focus on minimizing their exposure to attritional risk through the elevation of deductible levels.
Coverages Infectious Disease, Cyber, Supply Chain risk and other areas of Contingent Business Interruption continue to be a topic of discussion, with many insurers imposing coverage restrictions.
Claims Dynamics
Technical loss adjustment practices are creating a challenging environment: A number of global underwriters endeavoring to improve their loss ratios are adopting a very technical and often limited approach to adjusting losses. This quite often involves the appointment of external lawyers who justify their engagement by providing very restrictive advices on policy cover. The intent of cover is often being overlooked.
Transfer of talent continues: Adjusting firm talent continues to transfer among the larger firms leading to instability in the claims process as new staff are required to resume the work of their predecessors.
Competing priorities create challenges and delays: Increasing scrutiny of large and / or complex losses, including engagement of coverage counsel by (re)insurers, continues, even as loss adjusters are under pressure to reduce costs and simplify the adjustment process. The outcome is a longer claims cycle and extended timeframes to achieve settlement.
