Asian insurers benefit from global expertise
Opportunities for growth in the east of the Asia Pacific region will ultimately be driven by the forecast acceleration of the economy in that region, Kent Chaplin, Lloyd’s head of Asia Pacific, told EAIC Today.
“The countries in Asia are radically different, but as a region the GDP growth is very positive compared to that in the west, and positive GDP growth flows through to the insurance penetration,” he said.
“Penetration is currently very low in Asia and there is an opportunity to increase that. As we increase insurance penetration there will be an increase in demand for insurance and reinsurance. That’s a real opportunity but it also poses the challenge of raising awareness in populations and economies of the need to buy insurance and reinsurance.”
He said that in the markets in Asia Pacific that are still growing—and growing quickly—the greater demand for insurance and reinsurance is matched by a demand for expertise.
“The region is awash with capital—there is certainly no shortage of capacity or capital in the market—but there is a shortage of the expertise which lies behind it, so for international reinsurers such as Lloyd’s the biggest opportunity is around sharing expertise with insurers in the region, providing support and partnering with them. That has a huge long-term benefit to the industry.”
He added that the growth in GDP is resulting in infrastructure development and urbanisation, all of which needs specialist insurance and reinsurance.
“This is really the heart of Lloyd’s business proposition, which is to be able to provide protection for major infrastructure, construction and engineering. As businesses are building these large projects they require specialist insurance to protect their assets,” Chaplin said.
Prolonged soft market conditions are as much of an issue in Asia as in the west, he said. The continued uncertainty in the global economy and the impact that will have on Asia is also a challenge for re/insurers in the region, although its impact is less than it is in the west.
“The question is how you can continue to trade when you aren’t expecting high investment returns, so you really have to concentrate on the core of the business, which is the underwriting—and that’s got to be profitable and sustainable.”
