Asia-Pacific: growing fast but underinsured
The Asia-Pacific region will increasingly hold the biggest opportunities for global insurers and reinsurers, according to Munich Re, which has tried to quantify forecast insurance growth in the region in a new report. But it will remain vulnerable and underinsured against natural catastrophes.
Premium income for the insurance industry in the Asia-Pacific region will double by 2020 to more than more than €1 trillion, according to a study published by Munich Re’s Economic Research Department. It predicts that nearly half of the estimated additional global primary insurance premiums will be generated in Asia-Pacific until 2020 (worldwide €2.2 trillion).
The contribution from what the report calls “emerging Asia” – markets such as China and India – to this figure will be nearly 70 per cent (about €670bn).
Five of the expected global top-ten primary-insurance growth markets will be in the Asia-Pacific region, both in property/casualty (P/C) and in life. Munich Re expects China to be the country with the highest increase of primary insurance premiums worldwide until 2020 (additional €425bn), followed by the US (additional €350bn) and Japan (additional €157bn).
In emerging Asia, P/C primary insurance premiums currently grow on average by 11 per cent annually. This is twice as high as the second-placed region, Eastern Europe.
“China, India and Indonesia will be the top-three growth countries in P/C, with average growth of above 12 per cent over the forecast period (2012-2020) in China and India, and almost 10 per cent in Indonesia,” said Michael Menhart, chief economist at Munich Re. This means Indonesia’s P/C primary insurance volume will more than double in size from almost €3bn in 2012 to €7.3bn in 2020.
Average growth rates of other emerging countries, such as Vietnam, the Philippines, Malaysia and Thailand, range between 6 per cent and 8 per cent.
This is driven by increasing risk awareness and a growing middle class. Rising consumer savings are fuelling demand for life and health insurance, changing regulations and greater consumer protection will increase demand for motor and liability insurance, while large infrastructure investments will boost the demand for industrial insurance, the report said.
But despite these substantial premium growth expectations, emerging Asia will continue to be severely underinsured, especially against natural catastrophes.
The long-term statistics from Munich Re’s GeoRisksResearch show how vulnerable Asia-Pacific is, especially to natural catastrophes. Since 1980, 40 per cent of all natural catastrophes worldwide took place in Asia-Pacific, 45 per cent of all economic losses, but only 18 per cent of all insured losses. By way of comparison, the share of insured losses in North America amounted to 64 per cent. Also, over 50 per cent of all fatalities from natural catastrophes occurred in Asia-Pacific.
