Hannover Re sees no renewals surprises but worries on geopolitical events
Hannover Re is optimistic about the renewal season, anticipating “no surprises, we hope” and discipline in line with this year’s 1/4 and 1/7 renewals. But Sharon Ooi (pictured), an executive board member at the reinsurer, does have some concerns, including geopolitical tensions and their potential impact on Asia.
“It’s about ensuring consistency in our views of the risks we’re taking on.” Sharon Ooi, Hannover Re
“You have to be cognisant around the geopolitical tensions we’re seeing globally. The wars that have erupted will always have ongoing repercussions that can impact the Asia-Pacific markets as well,” she warned, speaking to Intelligent Insurer.
The road ahead has other potential challenges. Inflation, for instance, remains a significant concern, Ooi said.
“Core inflation is higher now than the pre-COVID-19 averages in many Asia-Pacific markets. The issues and situation haven’t changed much. This needs to be factored into our thought process, especially when assessing the expected impact on loss cost,” she added.
Ooi highlighted the issue of social inflation, especially in countries with active litigation funding. She stressed that the diversity of the Asia-Pacific market makes inflation a difficult topic to generalise around. It can be as relevant in mature markets such as Australia and Japan as in large emerging markets such as India and China.
“Inflation is an issue in India as much as it is in Australia, and the impact of secondary peril losses is an issue as much in India as in China. So for us, it’s about ensuring consistency in our views of the risks we’re taking on,” Ooi explained.
She touched upon other regional challenges, from insurance affordability, accessibility, the widening protection gap and increasing severity and frequency of secondary perils due to climate impact, to the transition to a carbon-neutral economy and the shift to IFRS17. The geopolitical landscape, marked by tensions and conflicts, can also have ripple effects on the Asia-Pacific markets.
“Asia is extremely diverse. The market conditions in each country differ significantly due to differences in regulatory frameworks, macroeconomic fundamentals in terms of GDP growth, and inflationary concerns,” Ooi observed.
