Softening Asian rates put underwriting efficiency in focus

Asia-Pacific offers huge growth potential, but softening rates are squeezing reinsurers’ margins. mea Platform’s Tom Ludescher explains how AI at the front door of underwriting can make that growth pay.

Key points:
Protection gap offers growth potential
AI can cut submission handling work
Underwriters retain accountability

On paper, Asia-Pacific is the natural growth market for global reinsurance, combining steady economic expansion with the world’s largest protection gap. Yet converting that potential into underwriting profit is not simple. As rates soften, controlling costs has become just as important as writing the business.

Tom Ludescher, APAC leader at mea Platform says AI can bring those costs down quickly, starting with the submissions, bordereaux, and claims data that still arrive as emails, spreadsheets, and PDFs.

“Asia-Pacific and particularly Asia have been some of the major growth engines of the world for many industries for the past 25 years,” Ludescher told SIRC Today. “It’s a very well-developed insurance and reinsurance market.”

Property casualty prices have nevertheless fallen across the region this year, with general renewals down 10% to 20% and April renewals in Japan, South Korea and China seeing double-digit cuts.

 “The market definitely has capacity. But there is pressure on the price side,” he said.

Growth is being driven by structural shifts including green energy, the energy transition, electric vehicle supply chains and data infrastructure, while cyber remains a major source of demand.

These risks share a common challenge: they are technically complex and require extensive data to underwrite accurately. What Ludescher describes as “cheap capacity” alone will not solve that. AI can help underwriters work through the information faster and with fewer errors.

Marine is an exception to the broader softening trend. Conflict in the Middle East has pushed war risk premiums for Gulf transits to multiples of pre-crisis levels, and they remain elevated and volatile. That matters directly for Asia, which relies on the Gulf for a large share of its crude and LNG.

“Pricing that risk properly is a data problem,” Ludescher said. “You need vessel, voyage, cargo and routing data in front of the underwriter quickly, and it changes week to week. That is exactly where capacity alone doesn’t help you.”

The region’s protection gap provides another significant growth opportunity. Natural disasters in APAC caused around $76 billion in damage last year, he said, but less than 10% was insured.

At the same time, the region has the world’s largest protection gap. Natural disasters in APAC caused around $76 billion in damage last year, but less than 10% was insured. “This shows you how much more growth potential the region here has if those risks can be properly covered by insurance and reinsurance.” 

The picture is similar in life and health, where Swiss Re puts Asia’s health and mortality protection gaps at a combined $390 billion a year in premium terms, and where the world’s fastest-growing middle class is driving demand for cover.

Regulatory change is also reshaping the market. New solvency regimes in South Korea and Japan, alongside the global rollout of IFRS 17, are being followed by changes in Malaysia and Indonesia.

Ludescher said these reforms are encouraging firms to take a more refined view of risk and capital, increasing demand for co-insurance, structured deals and technically sound solutions.

“AI gives underwriters more time to focus on the clients.”

Reducing costs

As softer pricing squeezes operating margins, reinsurers face growing pressure to streamline the labour-intensive work behind underwriting complex risks.

“Reinsurers do have a margin issue. The margin is compressing under those market conditions, and clearly the cost pressure is on also here in the region, similar to what you already see in Europe or in the US.”

Ludescher sees submission intake as one of the clearest areas where AI can make an immediate difference.

“The biggest difference is usually in plain sight. It’s the front door. It’s where you get the information to do your treaty underwriting, your facultative underwriting,” he said.

Using AI to process incoming risk data can improve accuracy, reduce manual handling and speed the journey from submission to underwriting decision.

“The big blocks that you still see in the industry today are the bordereaux, technical accounting,” he said, pointing to the volume of information that still has to be processed before useful insights can be extracted.

Catastrophe modelling brings similar pressure. It “needs to be very accurate and it needs to be very fast”, Ludescher said, as underwriters work through changing hazard patterns and exposure data within tight timelines.

On the claims side, Ludescher said that using the right technology yields immediate financial returns. “You can always save one or two percentage points of your claims ratio with that in your combined ratio.”

Time for relationships

Automating routine administration also preserves the human side of the business by moving underwriters away from low-value processing and towards account management and client relationships.

mea Platform is an insurance-specific AI layer that reads and processes submissions, bordereaux and claims documents, sitting above a carrier’s existing systems rather than replacing them. The platform has processed $450 billion in submissions over the past five years, streamlining input frees up underwriters to concentrate on higher-value work. 

Tom Ludescher is APAC leader at mea Platform, and can be contacted at tom.ludescher@meaplatform.com

For more news from SIRC Today, click here.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.