Emerging risks, affordability and protection gaps reshape APAC growth opportunities: Aon

Aon’s Reinsurance Solutions leaders across APAC tell SIRC Today how regional challenges are reshaping priorities — and where insurers can still find sustainable, profitable growth.

Key points:
India needs capacity for emerging lines
Product innovation opens new markets
Regional priorities diverging

Shailendra Sapra, CEO, India 

The biggest regional challenge for clients is sourcing reinsurance capacity for emerging lines growing rapidly in India, including cyber, surety, engineering and construction, and marine hull. Aon is using its global access to reinsurance and alternative capital, alongside regional product expertise, to develop solutions tailored to the Indian market. A data-led approach can generate portfolio scenarios that highlight potential margins, while greater agility and creativity from reinsurers could give them access to profitable commercial business.

The other major challenge is the introduction of IFRS 17 and a risk-based capital regime over the next two years. Aon is helping insurers understand how new governance structures will affect profitability and how reinsurance can be used as a form of capital to improve return on capital and book values.

Aon is bringing together insurers, reinsurers, capital providers, governments and development organisations to create scalable solutions.

John Carroll, CEO, Australia and New Zealand 

Insurance affordability is the region’s most pressing challenge. Australia and New Zealand are mature, highly penetrated markets, but a succession of weaker underwriting years drove material premium increases and intensified affordability concerns.

The industry is responding through more granular data and address-level pricing. This can moderate affordability pressure across the broader population, but may also produce significantly higher prices, or reduced appetite, for exposures in higher-hazard locations.

The strategic risk is that better data and insight could widen the protection gap for those most in need of cover. Equally, the same market dynamic presents opportunities for disciplined, sustainable growth.

Aon is helping clients translate enhanced data and analytics into action aligned with each organisation’s individual view of risk, enabling them to sharpen portfolio strategy, improve profitability and expand the boundaries of insurability.

Philippe Sommer, CEO, Japan 

After several benign catastrophe years and fewer major individual losses, Japanese insurers face less pressure from reduced reinsurer appetite, while pricing reflects a softer market. At the same time, regulatory changes to the domestic insurance agency system and the incoming economic solvency framework, ICS, continue to challenge established practices.

Aon combines analytics, broking expertise and local knowledge to help clients optimise portfolios and product offerings, while working with reinsurers to demonstrate Japan’s improving risk landscape and encourage a return of capacity and appetite on more competitive terms.

Japan still has a significant protection gap, and Aon is investing in local resources and innovation around parametric earthquake cover, secondary catastrophe perils, offshore wind, cyber, specialty lines and mortgage risk.

Through data tools and advisory services, Aon aims to improve decision-making, identify profitable growth opportunities and increase capital efficiency, helping clients strengthen resilience and pursue sustainable growth domestically and internationally.

Soeren Soltysiak, CEO, Asia

Global events have slowed economic activity across much of Asia, intensifying competition for existing domestic business. Reduced margins and an uncertain outlook are also increasing pressure on shareholder returns and capital protection.

Aon is using advanced analytics to help clients understand portfolios, identify concentration risks and find underpenetrated areas.

The protection gap remains significant. In many markets, most economic losses from natural catastrophes and other risks remain uninsured, while insurers and reinsurers compete for a relatively small pool of insured risks.

Sustainable growth therefore depends on broadening access to insurance rather than simply redistributing existing business. Aon is working across the ecosystem, bringing together insurers, reinsurers, capital providers, governments and development organisations to create scalable solutions.

Examples include coordinated efforts in India and Thailand, and public-private initiatives in the Pacific Islands. Sharing best practice and successful models can help reduce the protection gap while creating long-term growth opportunities.

Joe Liang, executive chairman, Greater China

Across Greater China (including mainland China, Taiwan, Hong Kong), auto insurance growth has slowed sharply to flat, while non-auto growth has fallen to low single digits. Rapid growth in electric vehicles and autonomous driving has reduced claims frequency, while demand for new vehicles has saturated. Non-auto growth has also slowed with the wider economy.

At the same time, regulators’ “Reporting and Execution Consistency” rule has lowered expense ratios and improved profitability for many insurers.

The bigger challenge is emerging risk. Artificial intelligence, new energy vehicles, data centres, new materials and advanced technologies are developing faster than traditional insurance products can respond.

For brokers, the opportunity is therefore not simply to provide traditional reinsurance protection, but to help clients design new products for emerging risks. Through product innovation, analytics and tools, Aon aims to help clients grow, improve profitability, strengthen competitive advantage and support future revenue growth.

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