Demand for Asia Pacific catastrophe reinsurance at a record high
Total Asia Pacific catastrophe limit purchased in 2013 increased for the tenth year in a row, but failed to keep pace with strong GDP growth in the region, according to a report by Guy Carpenter.
“With excess capacity returning to the market in 2013, reinsurance buyers in the Asia Pacific region were able to secure greater value at renewal, although with recent losses etched into the collective memory of the market their ability to achieve significant price reductions was limited. Total catastrophe excess of limit in the region continued to grow,” said the report.
The report also discusses the key drivers that have fuelled this growth in limit over the past ten years, notably an increasing focus on risk-based capital standards, growing awareness of non-modelled perils and rising insurance penetration in our emerging economies.
It stated: “Despite this strong record of catastrophe limit growth over the past ten years, the fact is that it has failed to keep pace with growth in the rapidly expanding economies of the Asia Pacific region over the same period. In many markets the purchase of insurance is still not a priority. In others the actual product on offer does not satisfy the demand.”
With dedicated traditional reinsurance sector capital for Asia Pacific at a record high and with alternative capital seeking peak zone catastrophe opportunities in the region, Guy Carpenter predicts that the conditions are ripe for a broader reinsurance community to respond positively to this growth opportunity with innovative and customised solutions.
James Nash, CEO of Asia Pacific region, Guy Carpenter said: “As evidenced by Guy Carpenter’s Asia Pacific limit and rate on line index, our region has demonstrated strong, solid growth in catastrophe reinsurance over the past ten years.
“Growth in total catastrophe limit purchased, however, has failed to keep pace with the stellar economic performance of the Asia Pacific region. We remain committed, therefore, to helping our clients achieve profitable and sustainable growth with customized products and solutions that stimulate re/insurance buying.”
