Insurance markets in Asia
No. 4/2001
Insurance markets in Asia: sanguine outlook despite short-term uncertainties
Swiss Re's latest sigma study, “Insurance markets in Asia: sanguine outlook despite short-term uncertainties”, outlines current and future trends in Asia’s USD 600 billion insurance market. The study concludes that prospects for the life insurance industry are particularly positive.
Asia’s insurance markets have bounced back from the slump following the Asian financial crisis, with non-life and life insurance businesses, excluding Japan, expected to grow annually by 7.9% and 8.9%, in real terms, from 2001 to 2005. The boost from further economic development – underpinned by sounder fundamentals – will ensure that the region remains one of the fastest growing insurance markets in the world. However, Japan will continue to lag behind with annual growth of only 1.9% in non-life and 2.3% in life.
Globalisation and other associated trends are bringing about an irreversible transformation of the Asian insurance marketplace. This process has been expedited by the soothing impact of the Asian financial crisis on reform resistance and its contribution towards the acceleration of change:
- The globalisation of Asia’s insurance markets is set to gather steam, particularly on the back of the gradual opening up of the two most important future growth markets – China and India.
- Deregulation has gained widespread acceptance in Asia, resulting in a pronounced shift towards solvency-based supervision. Looking ahead, greater differentiation among insurers, a squeeze on margins and more volatile underwriting results are expected. This will ultimately lead to more emphasis on capital productivity.
- Insurers will intensify their quest for more cost-efficient distribution channels. Aided by the scrapping of regulatory obstacles, bancassurance is likely to gain prominence. Internet distribution will continue to be explored, but the focus is expected to be on the enhancement rather than on the disintermediation of traditional agency channels.
- Consolidation will continue to characterise most insurance marketplaces, but regional differences in terms of the pace and rationale for consolidation will become more pronounced.
Along with the unfolding of these industry-shaping trends, life insurance business is expected to derive additional impetus from a number of specific factors:
- Asia’s high savings rates and policyholders’ increasing willingness to take on investment risks offer attractive asset management opportunities to insurers.
- The region’s rapidly ageing population signals the need for governments to provide sufficient retirement provisions. Most Asian governments are looking to the private sector to take a leading role in meeting this challenge.
- Bancassurance is helping life insurers to better segment clients and access high net-worth sectors. Based on this innovative approach to distribution, life insurance penetration is set to increase, particularly in China and India, where banks boast far-flung distribution networks.
This publication can be downloaded in English, German, French, Spanish and Italian.
Download "Insurance markets in Asia: sanguine outlook despite short-term uncertainties"
Download "Versicherungsmärkte in Asien: viel versprechender Ausblick trotz kurzfristiger Unsicherheiten"
Download "Marchés de l'assurance en Asie: de bonnes perspectives en dépit d'incertitudes à court terme"
Download "Los mercados del seguro en Asia: optimismo a pesar de las inseguridades a corto plazo"
Download "Mercati assicurativi in Asia: prospettive promettenti nonostante le incertezze sul breve termine"
For further questions and copies of Chinese or Japanese versions, please contact sigma@swissre.com.
