Insurance markets in Asia have experienced a period of stabilisation in terms of pricing, with composite pricing plateauing in the third quarter of 2023, according to Marsh’s latest pricing index.
This static trend contrasts with the global commercial insurance landscape, which experienced a 3% increase over the same period.
Property rates in Asia showed a modest increase of 2%, driven by selective rate reductions in markets such as China and Korea, offset by higher rates due to natural catastrophe risk in the region. Despite the majority of domestic insurers reporting profitable results for the first half of 2023, there remains a degree of caution for the second half of the year, spurred by recent extreme weather events in North Asia.
Property owners in areas of higher catastrophe risk have also come under closer scrutiny by insurers. With inflation coming down from its 2022 peak, insurers were persistent in their demands for updated property valuations, reflecting continued awareness of the potential impact on their portfolios.
Conversely, casualty pricing declined by 2% during the quarter, reflecting abundant capacity and competitive dynamics between international and local insurers. Reduced business activity was also a factor in this decline. Insurers continued to be cautious on US exposures, influenced by the significant settlements and awards in this market.
Rates for workers’ compensation and auto liability have been particularly competitive, with several markets in the region reporting declines. Insurers’ attention is increasingly focused on risks such as PFAs, bushfire liabilities coinciding with the onset of El Niño, product recalls, North American exposures and the prevailing claims inflation landscape.
In cyber, pricing remained stable, reflecting a sector adjusting to increased risk appetite and market capacity. Underwriters’ emphasis on robust cybersecurity measures has not diminished, with scrutiny of coverage areas related to war and current geopolitical tensions.
Despite a flattening of rates, the severity of ransomware and the sophistication of threat actors continues to increase. Data encryption and business interruption have emerged as significant loss drivers in the cyber insurance conversation.
“After years of increases, even a modest reduction in cyber rates will be welcomed by clients and is in large part a recognition of the hard work they have done to improve their cyber resilience,” said Pat Donnelly, Marsh specialty and global placement president. “However, the property market – and property catastrophe in particular – remains challenging and is an area of focus for our work with clients.”
