6 November 2013News

Asian reinsurance capacity pressures pricing

96 percent of respondents to the 1st Asia Reinsurance Barometer, carried out by the Qatar Financial Centre Authority, have indicated that they anticipate reinsurance supply to increase in Asia.

The report said that reinsurers operating in Asia should expect their margins to come under increasing pressure as a result. Increasing reinsurance capacity will however be welcomed by regional cedants and brokers alike, who will be able to broaden their sources of reinsurance capacity.

62 percent of respondents believe that reinsurance pricing will decline over the next twelve months as supply outstrips demand. While 54 percent of respondents said that they expected terms and conditions to remain unchanged in the coming year.

Reinsurers will also face increased retentions among primary players, according to 69 percent of those polled, with insurers facing “mounting pressure from shareholders and ratings agencies to retain a higher portion of profitable business”.

It is not all bad news for reinsurers however. The report found that strong economic growth in Asia will encourage greater re/insurance take-up, which currently stands at $30 billion within the Asian non-life reinsurance market. Those polled see the “region’s economic and insurance growth momentum as its most relevant strength”. Premium growth is expected to outstrip regional GDP growth in the coming years, “driven by the accumulation of insurable assets in catastrophe exposed areas and low penetration rates”.