2 November 2014 Insurance

Competition pushes reinsurers to target primary lines

As competition between reinsurers in the region has heated up in recent years, more players are starting to compete with their clients in the primary market, Stuart Spencer, CEO of Asia Pacific general insurance at Zurich Insurance, told EAIC Today.

He stressed that Zurich feels it has an advantage over its peers in that it is less dependent on reinsurance as a business compared with some of its peers—both in the Asian markets and globally.

“Zurich aims to underwrite as much of its own risk as possible,” Spencer said. “The financial strength of the business means that it has great capacity to absorb losses and we don’t rely on reinsurers as much as some of our peers.

“One notable trend is that some reinsurers are now competing in the primary market.”

Beyond this, he said that when considering conditions in the Asia-Pacific insurance markets as a whole, it is difficult to generalise, such is the diversity of the markets in question.

“The single most important factor is the sheer diversity of the region,” he said. “The variety—political, economic, regulatory, cultural—means that Asia-Pacific’s economies are always driving in different gears.”

But he added that there are certain specific markets the firm anticipates growth in and he is optimistic in terms of the wider picture.

“Right now, we see high growth markets like Malaysia, while the industry is finding unlocking growth a tougher challenge in more mature markets like Australia. Overall, I am extremely optimistic about the region’s prospects,” he said.

Spencer’s biggest challenge, however, is finding and keeping the best people who are able to manage and leverage the opportunities in this large and diverse market.

“Finding and keeping the best people is high on my list, as is the growing complexity of regulation, governance and compliance. All these things stem from the single greatest challenge: managing the sheer diversity of this region,” he said.

For an insurer, this year has been a relatively benign one in terms of losses in the region. While there have been some losses, the major catastrophe risks of the region, such as typhoons and earthquakes, have not hit as hard as they can, he stressed.

But in some ways this represents a double-edged sword. “The net effect is that capacity is up and industry competition is fiercer,” he said.

Despite the challenges, however, the potential for growth in the Asia-Pacific region remains very robust.

“Macro and demographic trends show the sheer size of the opportunity. As consumer spending switches from needs to wants, aspirations rise.

“Zurich is aiming to capture the millions of Asians who join the market every year with greater demands for protection in areas such as motor and accident and health,” Spencer said.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk