A tougher marketplace in Asia calls for companies to take a different approach to risk and insurance driven by data and analytics
Large and complex risks will continue to dominate the Asian commercial insurance market, proving the current business model unsustainable and not fit for purpose...
...according to Willis Towers Watson’s (NASDAQ: WLTW) 2019 Asia Market Report. The report sheds light on the challenges for the year ahead faced by insurance buyers and insurers in Asia, noting that disruptive technologies, geopolitical risks, and increasing demographic and societal changes have resulted in a need for a new data and analytics-driven approach to risk mitigation and management.
With 2018 being an active year for natural catastrophes in the region, this has severely impacted many lines of insurance across all major Asian markets. The Lombok earthquake, Osaka earthquake, Mangkhut and Jebi typhoons, were some of the events which marked significant attrition losses and continued downward pressure on insurance rates, impacting results across many insurers’ portfolios. These sustained losses, coupled with the increasingly complex global and economic backdrop, has meant that most international insurers have had to re-engineer their portfolios.
“There have been a tighter scrutiny of underwriting practices and withdrawals by insurers from certain countries, lines of business and, in some cases, the region altogether. This is evidenced by the toughening of the market with insurers returning to technical underwriting. However, not all domestic markets have had the same experience nor are all countries seeing a hardening marketplace. China continues to ‘buck the trend’ and grow as an increasingly important hub for non-Chinese business,” says Ron Whyte, Chief Operating Officer, Corporate Risk and Broking Asia, Willis Towers Watson
As a result, a more professional marketplace and increasing political and economic pressures around the world has necessitated a new approach to risk and insurance.
“A different risk management approach is needed and, in particular, one that focuses on risk mitigation. Cyber exposure has expanded beyond data breaches and must now be considered in the context of disruptions to supply chains. Liability exposures are further evolving with the rapid adoption of new technologies and must be carefully considered to ensure that the insurance policies remain relevant and responsive. Geopolitical risks are abound across the Asian region with unforeseen and uncertain impacts. It is therefore important for companies to understand, prevent, protect and then respond with the right insurance and risk strategy for their businesses,” says Scott Burnett, CEO, Corporate Risk and Broking Asia, and Head of Asia at Willis Towers Watson.
“Too often, we hear clients struggle to quantify the financial impact and likelihood of risks to their business. Today, companies need to know, with certainty, that the insurance strategy they have in place is exactly right for their business. With new and emerging risks on the accelerated rise, they need to adopt a data-driven and actuarial approach to support all aspects of their insurance procurement process to yield better business outcomes,” adds Scott.
In the report, Willis Towers Watson outlines the urgent need for insurance buyers to go beyond traditional brokerage services, including assessment, transfer, placement, and claims. Risk engineering must be present at all stages of the engagement, with data and analytics being used to inform conversations with companies to help them look beyond current risks, allowing companies to take a more strategic approach to insurance.
The Asia Market Report was compiled from Willis Towers Watson data across its corporate risk and broking business in the Asian region. Produced annually, it highlights the key trends that are shaping the insurance marketplace across industry lines of business and looks ahead to how the market will develop in 2019. This includes Property & Casualty, Marine, Construction, Financial Solutions, Terrorism, Natural Resources, Aviation, Financial lines, Captives, and the review by various markets.
A copy of the full report can be accessed through the Willis Towers Watson website
Key insurance premium rate predictions for 2019
|Property & Casualty|
|Non cat-exposed risks||-5% to 5%|
|Cat-exposed risks||0% to 5%|
|Large cat loss affected||10% increase and more|
|Downstream energy||10% increase|
|Upstream energy||10% increase|
|Hull||0% to 10%|
|Ports/Yards||-5% to -10%|
|Airline hull and liability lead||5% to 15%|
|Premium rates||5% to 15%|
|Flat to -7.5%|