India tipped for rapid insurance growth

With penetration in the Indian insurance market extremely low at just 0.8 percent, the area offers great potential for insurers and reinsurers and, as with China, the country is expected to bring significant growth rates over the coming years.

In contrast, the mature markets are very saturated, with clients more prone to retain risk, and reinsurers in those areas need to differentiate themselves in terms of their offerings.

That is the view of Dr Tobias Farny and Roland Eckl, both chief executives for Asia Pacific for Munich Re.

“In Japan and Australia we talk about very saturated markets,” said Eckl, who is responsible for Australasia, Japan, India and the Indian subcontinent.

“We see a tendency for companies to retain more business themselves, but nevertheless in the last few years we have been able to generate a substantial amount of additional premium. The difference is the expertise and knowledge base that we bring to the table.”

Farny is responsible for Greater China, Korea and Southeast Asia and his view is that clients are often driven by the need to grow their books of business.

“They have their shareholders and they need to show that their business case is good, growing and profitable, so in many markets, but especially in the less mature markets, clients come to us trying to find ways to tackle segments they are not comfortable with—for example, complex industrial liability or more advanced trigger-based natural catastrophe solutions.

“They are seeking products with which they can grow their book of business knowing they are being supported from the reinsurance side.”

He added that the markets in China and Southeast Asia are still very much dominated by motor insurance,

“In China more than 70 percent of business is motor, so there is room to grow, but they need the right products and the right way to reinsure these products and that’s what we are looking to offer.”

He believes that further growth potential can be created by improving the perception and understanding of the insurance industry in areas with low penetration.

“We’re trying to encourage the insurance associations to push forward the entire idea of insurance because that’s still sometimes lacking.

“We need to push the product to some extent, and explain why it’s good for you and worth buying.”