Asia to make up 45% of global premium growth in next eight years:Munich Re

Tuesday, 11 December 2012 00:00 - - {{hitsCtrl.values.hits}}

Asia-Pacific is estimated to account for about 45% of worldwide gross written premium growth in the next eight years, according to Munich Re. However, it will need to further develop its risk management, solvency and Nat CAT capabilities as it emerges to be the growth engine of the global insurance business, says the re-insurer.

There is an increasing demand for solutions for Nat CAT, solvency and capital management in the region, says CEO of Japan, Australia and India at Munich Re, Roland Eckl,. As a global trend, companies are building a robust framework for enterprise risk management, requiring higher standards and transparency.

Rapid development in Asia has generated new exposures, which are more complex and pose higher value risk scenarios for companies. Eckl says the Thai floods in 2011 were a wake-up call for the huge concentration of insured values that developed in Asia in recent decades. Key industries with contingent business interruption were particularly affected.

The Thai floods highlight the issue of lack of knowledge of fast-growth hot spots, particularly large industrial parks, which accommodate many multinational companies in the automobile and electronics industries. This clustering of industrial exposures may generate high a concentration of insured values within a small geographic area.

Eckl says transparency about risk-exposed values is essential, along with the need for quality and depth of data knowledge. Transparency at all levels is required to reach risk-adequate pricing, he adds. Risk models underestimated loss potentials from the Thai floods. Transparency is the key to manage high-value industrial business, says Mr Eckl.

Meanwhile, Asian corporations are increasing their investment and business exposure overseas, and this internationalisation development is shaping markets such as China and South Korea, along with Japan, which has expanded globally in the past few decades, says CEO of China, Southeast Asia and South Korea for Munich Re, Tobias Farny. This business growth is proving to be an engine for growth among Asia-based re-insurers as well as their foreign counterparts.