Advanced Asia-Pacific

Non-life more resilient to COVID-19 than life



  • In Australia premium growth dropped sharply by 26% in 2019, a fifth consecutive year of contraction. Both investment-linked and risk product premiums shrank in the environment of lower interest rates and because of lack of trust in the financial services industry.
  • In Japan, life premiums increased modestly by 1.5% in 2019 (2018: +3.8%). Weakening economic growth and fragile consumer sentiment were key factors holding back demand.
  • Hong Kong reported a strong increase in life premiums of around 10% in 2019, due to rising demand for annuity products that come with new tax benefits. In Growth in South Korea, Taiwan and Singapore was more depressed relative to Hong Kong.
  • With economic recession projected for most markets in advanced Asia-Pacific, we forecast that life premiums will shrink by around 4% in 2020. A subsequent recovery in 2021 will not fully offset the drop. Unlike in emerging Asia where rising risk awareness is a strong supportive factor, economic constraints and negative wealth effects are more important for advanced markets given already high awareness and penetration rates.
  • Life insurance profitability will remain under pressure because of low interest rates. In Australia, the life insurance sector reported a loss of USD 174 million in 2019 and there are as of yet no catalysts for a sustained improvement. The updates to Japan’s standard mortality table in April 2018 have also resulted in narrower mortality margins and lower core profits for life insurers.


  • All markets in advanced Asia reported non-life premium growth increases in 2019. Growth was strongest in Hong Kong (+7.2%) and health was the most vibrant business across all markets. Growth in Japan (4.2%) was broad based, with particular strength in property due to firming rates and increasing take-up of covers after several natural catastrophes (mainly typhoons).
  • In Australia, premium growth improved to 3.6% in 2019 from 1.1% in 2018, driven in part by rate hardening in financial and professional liability lines.
  • The deep recession unfolding globally will also leave its mark on demand for nonlife insurance in the Asia-Pacific region with premiums forecast to decline by more than 2%. Firmer rates in Japan and Australia will cushion the blow.
  • In Japan, we forecast that non-life premium growth will contract by 3% in 2020, after an average increase of around 4% over the past two years. The COVID-19 induced economic recession, VAT hike in late 2019, and the postponement of the Summer Olympics will be key factors. The negative effect of these will be partially offset by rate hardening after recent typhoon losses.
  • In the rest of advanced Asia-Pacific, Hong Kong and Singapore will likely see a sharp reduction in non-life premium growth. We expect the recession-induced slump in demand to be less severe in South Korea and Taiwan.
  • Non-life insurer profits were hit by a series of natural disaster losses in 2019, particularly in Australia and Japan. In Australia, the bushfires ravaging the country since late 2019 may have dealt the industry its first underwriting loss since 2011, though some of the claims may be filed only in 2020. In Japan, insurers faced increased claims resulting from Typhoons Faxai and Hagibis.
  • Firmer rates in Japan and Australia could help underwriting profitability but are unlikely to be enough to offset the drag from weakening investment results in view of lower yields and equity valuations.

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