Increasing frequency of natural catastrophic events has created demand for reinsurance in the Asia-Pacific (APAC) region as domestic insurers seek financial resources to cover such massive risks, according to GlobalData, a leading data, and analytics company.

GlobalData’s insight report, ‘Global Reinsurance Market Outlook, 2021 Update – Market Analysis, Key Trends, Competitive Intelligence, Drivers, Challenges, Regulatory Overview and Developments’, reveals that Asia-Pacific headquartered 24 of the top 100 global reinsurance groups, with a reinsurance premium share of 17.3% in 2019. Of this, five Asia-Pacific reinsurers were among the top 20, with a consolidated reinsurance premium of US$37.7bn in 2019, growing at a CAGR of 13.2% during 2016-2019.

Manisha Varma, Insurance Analyst at GlobalData, comments: “Growing insurance markets, mandatory cession requirement in most countries and exposure to natural hazards such as earthquake, flood, wildfires and cyclones, supported the growth of reinsurance in the region.”

Asia accounts for 16.9% of the global general insurance market and 33.4% of life insurance. This is expected to grow to 17.8% and 34.2%, respectively, by 2025, providing high growth opportunity for reinsurers in the region.

China and India are among the fastest growing markets for both life and general insurance. Mandatory cession regulation and expanding insurance industry has helped domestic reinsurers increase revenue in these countries. Consequently, Chinese reinsurers, China Re and China P&C, and Indian reinsurer, GIC Re, recorded double-digit growth during 2016-2019.

Singapore and Hong Kong have asserted their position as global reinsurance hubs driven by its well-established regulatory framework and presence of robust financial infrastructure. Leading global reinsurers including Swiss Re, Munich Re, Scor and Hannover Re have operations in these countries

Climate volatilities, which have exacerbated risks from natural hazards, is another focus area for reinsurers. In 2020, losses due to natural catastrophe in the region was US$67bn; of which only 4.5% was insured, indicating huge gap and growth opportunity for both insurance and reinsurance companies.

To provide optimal reinsurance coverage at affordable price, reinsurers are adopting catastrophe modelling technologies such as satellite images and real-time hazard maps. These technologies help in accurate risk assessment based on historical and near real-term weather data, thereby helping both insurers and reinsurers develop suitable cover.

Ms. Varma concludes: “Post pandemic economic recovery supported by resumption of infrastructure developments and growing insurance industry will support demand for reinsurance in the region over the next five years.”