Aon leaders outline the path to profitable growth as APAC markets soften

Aon’s Reinsurance Solutions APAC leaders discuss the key challenges facing the market and how they are helping clients navigate the 2027 renewals and pursue profitable growth.

Key points:
Capacity abundant across APAC
Renewal focus shifts to structure
Growth demands sharper risk management

Geoffrey Lambrou, APAC CEO for facultative reinsurance

Market conditions remain very positive for clients. Globally, natural catastrophe activity has remained relatively benign so far this year, while risk continues to evolve with greater complexity and the potential for increasingly large losses.

This year, we have further expanded support for clients through our proprietary facilities, which continue to grow at pace. These are both global and regional, operating as deal-quoting structures or fast, efficient follow-market support. We are also working in fast-growing areas of industry, developing tailor-made coverage for risks such as data centres and emerging renewable energy technologies.

Our facultative business continues to produce outsized growth as we deliver competitive pricing and coverage across specialty areas, supported by continued investment in talent and technology. We now have more than 150 team members across APAC, alongside data and analytics capabilities that provide proprietary market insights. That combination helps us support clients as they navigate both evolving risks and new growth opportunities.

Ai Ping Chan, APAC marine practice leader

Over the past five years, the global marine specialty market has seen a clear rise in major losses, some of which are still being recovered in 2026.

From the Russia–Ukraine conflict’s aviation war exposures affecting marine composite programmes in 2022 to the 2024 Baltimore Bridge event, now regarded as the largest single marine P&I loss in maritime history, the loss environment has become more complex.

However, abundant capacity has meant these and other major losses have not materially disrupted the softening trend in marine reinsurance since 2023, particularly for loss-free portfolios.

Cedants and reinsurers are increasingly differentiating renewal strategies according to exposure and loss experience. The challenge is to turn current market conditions into a sustainable advantage.

Aon’s marine reinsurance team combines sector expertise, marine analytics and global market relationships to design and execute programmes tailored to individual portfolios and strategic goals. The focus is on securing optimal terms, structure and cost while helping clients manage volatility and capital efficiency. As geopolitical and claims dynamics evolve, that combination will remain important in navigating increasingly complex marine risks.

Tom Drake, APAC chairman of speciality

During 2026, new markets have continued to enter the regional APAC retrocession space, while existing players have increased capacity.

This has added pressure on pricing and terms and conditions, leading to over-placement and resulting signing issues as reinsurers seek to maintain market share.

APAC retro buyers are responding to the softer environment in increasingly sophisticated ways. These include purchasing specific country sub-layers, broadening territorial scope, expanding class coverage and considering tailored multi-year structured solutions to lock in lower-layer pricing.

Aon’s APAC retro team works closely with its London and Bermuda counterparts, sharing market data and intelligence to respond quickly to changes in appetite and new product availability.

The market has also seen expanding proportional treaty capacity, both US and ex-US, with progressively more generous commission terms and coverage. Rather than simply adding more capacity, some APAC clients are also considering reciprocal trading agreements with other global reinsurers, exchanging territory, class or portfolio types on either a proportional or non-proportional basis.

Wen Chen, APAC head of agriculture

After several years of strong premium growth, agricultural insurance is entering a more mature stage. In several major markets, growth is beginning to slow as programmes mature and penetration gains become harder to achieve. Following several years of favourable underwriting performance, front-end rates have also started to soften in selected markets.

As a result, premium growth is expected to moderate. 2026 can be viewed as a turning point, with the market shifting from rapid volume expansion towards more structural and product-driven growth.

Governments and insurers are looking for new sources of growth by deepening existing crop protection and expanding into areas such as aquaculture, livestock and other specialty agricultural risks.

The year has also been more challenging from a loss perspective. Climate anomalies have produced significant weather events across major agricultural regions, including severe drought in India, excessive rainfall and flooding in parts of China, and significant drought in Europe.

These events have pushed loss ratios higher and again highlighted the systemic and highly correlated nature of agricultural risk. That deterioration is expected to increase retrocession demand for 2027 across proportional protection and regional XoL, particularly for portfolios with concentrated exposures.

Pierre Vende/Danny Alexander, APAC co-head of life & health reinsurance

Life and health reinsurance continues to gain strategic priority for composite reinsurers. We continue to observe double-digit premium growth in many markets, supported by ageing populations, rising wealth and high medical inflation.

At the same time, natural and human perils are trending upward, with increasing frequency and severity of catastrophe events, including climate-related flooding, putting greater pressure on insurers’ balance sheets and risk management frameworks.

The accelerating transition to Solvency II or similar risk-based capital regimes across Asia is also creating opportunities for reinsurers to deploy additional capital solutions. Non-traditional reinsurance, including asset-intensive reinsurance and capital optimisation reviews, continues to gain traction. Demand for asset-intensive reinsurance remains strong, supported by higher USD yields, while risk-based capital regimes are sharpening insurers’ focus on capital efficiency.

For health products, clients continue to seek support in claims risk management and trend analysis. Aon is investing in risk analytics to provide more timely insight from claims data, while AI creates further opportunities to identify emerging utilisation trends and support pricing, underwriting and portfolio management decisions.

Mariko Suehiro, casualty treaty, Asia-Pacific

The casualty market presents both opportunities and challenges across APAC, but the region cannot be viewed through a single lens.

Mature markets such as Australia, Japan and Korea are managing increasingly complex liability exposures as businesses globalise and supply chains become more interconnected. Emerging Asian markets, meanwhile, continue to see economic growth, increasing liability awareness and demand for broader coverage and higher limits.

Looking to the 2027 renewals, reinsurers remain focused on portfolio quality, underwriting discipline and long-term profitability. Capacity remains abundant, supported by established and new entrants, but deployed capacity is being managed carefully and renewal outcomes are increasingly differentiated by exposure profile, risk quality and claims performance.

Casualty portfolios also face pressure from economic and social inflation, litigation activity, class actions and litigation funding, alongside uncertainty around long-tail claims. For insurers with US or multinational exposures, large verdicts, reserve adequacy and accumulation risk remain key concerns.

Our focus is on helping clients differentiate portfolios through strong data, clear risk narratives and transparent exposure information, while accessing the right mix of regional and international capacity.

Katy Fairweather, APAC insurance vertical leader

As insurers enter the 2027 renewal season, profitable growth remains a central objective. While pricing, capital and catastrophe volatility will dominate many discussions, success will increasingly depend on building a workforce capable of keeping pace with rapid technological and market change.

The industry faces a growing challenge: AI adoption is advancing faster than workforce readiness. Aon’s Human Capital Trends 2026 study shows that 78% of insurers are already deploying or piloting AI, yet only 19% believe they can recruit and retain enough AI talent to support their ambitions.

At the same time, new risks, from climate and cyber to geopolitical uncertainty, are increasing demand for specialist expertise and new ways of working.

The insurers best positioned for profitable growth will be those that treat talent as strategically as capital. That means developing technical experts who can work alongside AI, professionals who can anticipate emerging risks and leaders able to drive transformation. Competitive advantage will not come from technology alone, but from having the people and skills needed to make the most of it.

Musa Adlan, managing director, Asia

Primary rates remain competitive and, in some territories, continue to soften even as reinsurance pricing eases. Original margins are compressing faster than reinsurance savings can offset them, so 2027 calls for a shift in focus from price to structure.

A soft market offers an opportunity to restructure working layers of excess of loss programmes and secure favourable terms, while profit commission features can allow cedants to recapture margin in benign years.

Aggregate XoL can cap frequency-driven losses, stabilising the net loss ratio and protecting earnings against further primary rate erosion.

Targeted quota share or capital-relief cessions can also release capital from long-tail, peak catastrophe or concentrated risks and redeploy it into higher-growth, better-margin segments.

Done well, these structures can reduce earnings volatility, improve capital efficiency and create capacity for profitable growth in 2027. Early engagement matters, however: structured placements need longer lead times and, in some cases, regulatory capital recognition should be confirmed well ahead of renewal.

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