In the second quarter of 2024, Asia’s insurance composite rate experienced a notable decline of 3%, driven by reductions across property, financial and professional, and cyber insurance sectors, according to Marsh’s latest report.
Property insurance rates in the region fell by 2%, marking the second consecutive quarter of year-over-year decreases. This downturn is attributed to heightened competition for property risks. Despite some clients benefiting from lower rates, insurers maintained moderate increases for risks highly exposed to natural catastrophes. They also continued to monitor inflation and the accuracy of declared values, including for business interruption coverage.
The trend towards alternative risk solutions, such as captives, has gained momentum among clients restructuring their programs to manage costs. This often involves retaining more risk, especially in the loss-exposed layers of coverage.
Casualty insurance rates saw a 1% decline as the amount of available capacity remained steady, despite a few new market entrants. Underwriters maintained a rigorous review of North American exposures, with auto liability and workers’ compensation rates remaining stable. Increased claims activity was noted in Hong Kong and Singapore.
Financial and professional lines also faced declines, with rates falling by 9%. The directors and officers (D&O) liability sector, in particular, continued to influence overall conditions within these lines. Increased capacity for D&O coverage led to intensified competition, resulting in average double-digit rate decreases for renewals in markets such as China, Hong Kong, South Korea, and Singapore.
The limited activity in capital markets has constrained insurers’ opportunities for new business, further driving competitive pressures at renewal. Rates for financial institutions (FIs) and professional indemnity (PI) insurance fell within the 10% to 15% range on average.
Cyber insurance rates experienced a 6% decrease, driven by new capacity in the Singapore market and growing interest from the London market. This has contributed to increased capacity and competition in the sector. Insurers have remained focused on strong cybersecurity controls and plans for improvements, while also being more flexible in how cybersecurity information is delivered. Increased attention is being paid to risks associated with AI usage, with insurers generally offering broader coverage options.
