THE ASIAN INSURANCE MARKET
Roger WilkinsonChairman & CEO, Asia Pacific, Middle East and Africa
Willis International
DEMOGRAPHIC OVERVIEW
It’s bigger than Texas!
Area 44,579,000 km2 (17,212,000 sq mi)Population 3,879,000,000 (1st)Pop. density 87/km2 (225/sq mi)
30% of the Earth’s Land Area
60% of the Earth’sHuman Population
ASIA MARKET OVERVIEWAsian market has grown over the last decade
Full Range of products on offerSingapore is a hub, with large markets in
China, Japan, South Korea & India
● Not very litigious…Yet! ● Market growth in all classes
but predominantly P&C Market
● All major players represented (Ins / RE)
• Ace• Allianz• Chartis• Zurich are some of the
Global players
● Protected Marketplaces● Markets and regulations
differ across Territories● Significant levels of
underwriting autonomy● Accelerating Inflation
levels a threat to insurance profitability
● Big capacity in all classes in Asia – the brakes are on since the Cat losses in 2011
SINGAPORE
● Big Reinsurance presence – 28 Reinsurers - US $2.6 bn ● Growth of Lloyds Asia Platform (Currently 22 Syndicates and US
$250-$300 m of written premium) – employing ~ 200 people● 61 Captive insurance companies● GWP US $7 bn (Singapore and regional risks – direct markets)
A US $5 bn Property Risk (Full Value) 100 % was recently placed
A well established business hub for SE Asia
Large Insurers
Total Insurers
Property Capacity
Liability Capacity
Motor %
All the usual suspects
15162 Direct
65 Brokers
US $3.5 bn US $700 m -
CHINAChina is there for China!Highly Protected
Large Insurers
Total Insurers
Property Capacity
Liability Capacity
Motor %
3 Giants 5938 Domestic21 Foreign
US $1 bn US $10 m 74.4%
● Fastest premium growth (28%) ● A full pipeline of infrastructure projects ● Foreign Companies still only make up 1.8% of the non life
market ● Increasing interest in D&O – Mostly related to US IPOs
JAPANVery much their own market
● # 1 in Asia for Total premium, # 2 in the world behind the US● # 1 in Asia for Non Life premium, # 3 in the world behind the US & Germany● Market share of the top 3 Insurance Groups = 80%● Insurance losses were modest pre March 2011 Tohoku Earthquake –
Household EQ & Nuclear Losses will be largely covered by Japanese Government, Private Insurers face billions on Property and Business interruption claims.
● Reconstruction will aid economic growth● Insurers taking stock and reviewing insurance coverage in light of CAT
events
Large Insurers
Total Insurers
Property Capacity
Liability Capacity
Motor %
3 Giants 50 US $850* m US $242* m 46.1
*Excluding Flood Earthquake, Tsunami & Special Risk
SOUTH KOREAVery much their own market
Dominated by large domestic insurers● Market share of top 5 insurers: 78% ( Samsung 25.8%, Hyundai: 15.7%, Dongbu:
15.3%, LIG: 13.7%, Meritz: 7.5%)● GWP US $50 bn● Recently introduced revised motor pricing scheme to reign in claims escalation● Increasing demand for long term products has driven growth, in concert with growing
industrial and commercial construction markets, a positive outlook for GDP growth and increased penetration of insurance products.
● The South Korean insurance regulatory authority introduced a new risk-based capital (RBC) solvency regime in April 2011 designed to increase insurance companies’ capital requirements, allowing them to assume higher risk and improve their financial stability.
Large Insurers
Total Insurers Property Capacity
Liability Capacity
Motor %
5 domestic multiline
199 domestic multiline,
4 direct motor,1 State owned credit
5 foreign
US $1.2 bn US $100 m 23.5
INDIAHighly regulated – Future government divesting
of public insurers
● 4 State owned Insurers – US 5 bn GWP● Private Insurers – US 3.5 bn GWP● Foreign ownership cap of 26%● Solid year on year premium growth led by the strong
performing motor and property businesses● Foreign insurers reviewing market entry● Slight hardening due to RI terms and regulatory measures
Large Insurers
Total Insurers
Property Capacity
Liability Capacity
Motor %
4 Large domestic
24 US $180 m US $50 m 40
MARKET TRENDS & CAPACITYBy 2015, approximately 39% of the world's economy is predicted
to be in the Asia-Pacific region1
1 Source: Ernst & Young Analysis – International Monetary Fund, United Nations Statistics Division, World Wealth Fund, Swiss RE Sigma 2005
● Huge capacity in the region● Increased interest in liability
coverage● Improvements in domestic
markets & increased sophistication in regulation
● Expect expansion of some of the larger Chinese players (already amongst the worlds largest) both in Asia Pac and globally
MARKET COMPETITIVENESS
● During the growth of the regional market in Asia it has often offered more competitive solutions than the international markets
● Asian clients like a quick turn-around in the same time-zone
● By being based in the region (Re)insurers can benefit from lower acquisition costs on some business
● Building local knowledge of risk profiles and business practice in the region can allow adaption of underwriting models to fit Asia
ECONOMIC LOSSES● 2/3 of US $380 bn1 Economic Loss in 2010 attributed to Japan Earthquake /
Tsunami & NZ Earthquake ● Japan may cost Insurers as much as US $35 bn2 – Huge amount of reinsurance
protection – high losses to property market • Thailand Floods may cost as much as US $12 bn3 – This was a loss that was
neither modelled nor anticipated – Thailand was previously considered a Non CAT zone• Zenkyoren – the ‘Farmers Mutual’ of Japan – estimated losses US $7.9 bn4
1 Source: Munich RE2 & 3 Swiss RE – Sigma #2 / 20124 Towers Watson – Insights, Insurance Industry Impact and Risk Management Lessons