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Member, Beacon International Group, Ltd.
Despite a year with few losses, Asian insurance markets remain competitive and may not be able to support further softening, according to a new report Tuesday by Aon Risk Solutions.
“Asia Market Review 2016,” the company's third annual such report, said that “2015 saw continued pricing pressures across most classes,” and that “both insurance and reinsurance markets continue to be very competitive” — so competitive that there may not be much more room to give.
“There is a growing recognition that continued reduction in rates and broadening of terms and conditions is not sustainable in the medium term, particularly in the current economic environment,” said the report.
Losses for the year were broadly benign with some isolated exceptions, it said.
“Another relatively benign year saw very few significant insurable losses despite some regional and global insurers sustaining large losses, like the Tianjin, China, port explosion,” said the report.
Property pricing suffered softness in 2015.
“Rate trends declined further during 2015 as increased mergers and acquisitions within the industry contributed additional capacity,” said the report.
Looking forward in the property sector, “The downward trend in rates is expected to continue into 2016 as an increasing amount of capacity is focused on a limited premium pool,” said the report.
The tale was similar in the reinsurance sector with an equation of light losses and abundant capacity.
“There remains an abundance of capital looking to Asia for growth, and that continues to fuel the competitive environment,” said the report, while “it was a benign year for insured losses from catastrophes.”
Thus, “The trends seen during 2015 are expected to extend into 2016, assuming that capacity remains at or above current levels and losses continue to be below their historical norm,” said the report.