Asia Commercial Insurance Market Still Favours Buyers: Marsh

AsiaNet 45595

SINGAPORE, July 21, 2011 /PRNewswire-Asia-AsiaNet/ —

Capacity and competition remain, but insurers are applying more underwriting discipline and pricing adjustments in select areas

Despite signs of a potential market shift in some areas of property insurance, the overall Asia property and casualty insurance market remained largely stable during the first half of 2011 as abundant capacity offset record catastrophe losses, according to a new report published today by Marsh.

Insurers are applying more discipline around their underwriting practices in select lines of business and are attempting to hold or increase rates. This is especially on property accounts with significant catastrophe exposures and poor loss histories, according to Marsh’s Asia Insurance Market 2011 Midyear Update.

Ample capacity and intense competition in Asia led to generally stable market conditions outside of property catastrophe. However, challenges are beginning to emerge for insureds in some areas of financial and professional lines insurance, specifically Asian companies with U.S. exposures.

“This year is on track to be one of the worst years ever for catastrophe losses,” said Geoff Lambrou, Marsh’s Placement Leader in Asia. “Although the Asian property insurance market is firming in areas, rate reductions are still available on property accounts with no catastrophe exposures and clean risk profiles.

“The flow of capital into Asia and fierce competition makes it still largely a buyer’s market. However, much will depend on further catastrophe losses through the remainder of the year, with a focus on the ongoing Atlantic hurricane season. Should the second half of 2011 pass with few or no catastrophe losses, the Asian insurance markets will remain stable into 2012.”

Major findings in the report include:

— Despite the major catastrophes in the Asia Pacific region such as the Japan earthquake and tsunami, the Australian floods and the New Zealand earthquakes, the property insurance market remained competitive with the exception of those risks with catastrophe exposures or recent losses.

— In general, directors’ and officers’ (D&O) liability and professional indemnity (PI) insurance remained competitive, except for Asian companies listed in or exposed to the U.S. In particular, rates for Chinese companies with operations or investors in U.S. have increased significantly due to the spike in U.S. securities class action law suits against Chinese companies.

— Terrorism insurance remains extremely competitive despite heightened concern following the death of Osama Bin Laden in May. Rates are low, terms are broad and capacity is ample for this type of insurance.

— The post-financial crisis rate increase for financial institutions has turned out to be only temporary. Rates for financial institutions are stabilising as underwriters compete and the Asian financial sector is enjoying healthy growth.

— Insurance for infrastructure development and construction remains easy to place at competitive rates, with a full pipeline for power stations, bridges, tunnels, roads and rail projects. However, operational power has shown some signs of increasing rates due to some significant losses in specific areas of that industry segment.

Marsh’s midyear update reflects transactions brokered by Marsh through early July 2011. Marsh’s benchmarking data provides clients with the current and relevant information available in the insurance brokerage industry to make informed risk financing and budgeting decisions.

Marsh’s Asia Insurance Market 2011 Midyear Update is available at: www.insurancemarketreport.com/asia.

About Marsh

Marsh (http://www.marsh.com), the world’s leading insurance broker and risk advisor, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has over 24,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a member of Marsh & McLennan Companies (http://www.mmc.com), a global professional services firm with 52,000 employees worldwide and annual revenue exceeding US$10 billion, which is also the parent company of Guy Carpenter (http://www.guycarp.com), the risk and reinsurance specialist; Mercer (http://www.mercer.com), the provider of HR and related financial advice and services; and Oliver Wyman (http://www.oliverwyman.com/ow/index.html), the management consultancy. Its stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. Follow Marsh on Twitter @Marsh_Inc (http://twitter.com/@Marsh_Inc).

SOURCE: Marsh