SINGAPORE, Feb. 2, 2012 /PRNewswire-Asia-AsiaNet/ —
Other Lines Flat or Decreasing as Competition and Capacity Remain
Commercial insurance rates in Asia are expected to climb in regions affected by natural disasters following record insurance losses in 2011, according to a comprehensive report published today by Marsh. The report also predicts that as competition among insurers for market share in many other lines of insurance remains strong, rates will continue to decline.
Substantial catastrophe losses prompted many insurers to seek rate increases in 2011, most notably in the property market, Marsh said in its report, Navigating the Risk and Insurance Landscape: Asia Insurance Market Report 2012. In disaster-hit regions, rate increases of over 30 percent are being experienced for natural catastrophe and some property risks, especially flood risk.
The report notes that the continued inflow of insurance capital, as underwriters seek to grow their Asian business, is preventing any across-the-board increases in premium rates. Local and regional insurers remain competitive, as the indigenous industry continues to become more sophisticated.
“Although reinsurance costs have risen following last year’s record losses, they are not being passed on to most insureds,” said Alan Cheah, Marsh’s CEO for Asia. “In addition, capital inflow, continued growth in the construction sector, and a heightened awareness of insurance and risk management have combined to lessen the effects of last year’s catastrophes on the broader market.
“Aside from increased property insurance rate increases — especially for those insureds with significant loss histories or catastrophe exposures — rate reductions for risks such as construction, general liability, professional indemnity and financial institutions are still achievable.”
Directors’ and officers’ (D&O) liability for U.S.-listed Asian companies are still rising, continuing a trend that began in 2010 with a spike in U.S. Securities Class Action lawsuits against Chinese companies. Despite some recent data suggesting the volume of lawsuits has peaked, rates are still expected to rise in 2012.
Rates in Japan have stabilised following capacity withdrawal and rate rises for businesses with operations in areas affected by last year’s earthquake and tsunami. In Thailand, rates for property insurance increased in flood-affected areas but have remained stable for other lines of insurance.
Major findings of Marsh’s report include the following:
— Underwriters are taking a more cautious approach to business interruption, contingent business interruption and supply chain insurance following large losses after the Japan earthquake and Thailand floods.
— Rate reductions of between 5 percent and 20 percent for general liability classes are almost universal across the region as ample capacity and competition persist.
— There is increased interest in trade credit insurance, as Asian suppliers become increasingly wary of their trading partners’ credit worthiness in Europe and the U.S.
Marsh’s annual Asia Insurance Market Report, which provides detailed information on commercial insurance market trends and conditions for all major classes of business across eleven countries in Asia, including mainland China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam is available at www.insurancemarketreport.com . Clients can also use this link to access Marsh reports for other regions and for multinational companies globally.
Marsh ( http://usa.marsh.com ), a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 25,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies ( http://www.mmc.com )(NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding US$10 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter ( http://www.guycarp.com ), a global leader in providing risk and reinsurance intermediary services; Mercer ( http://www.mercer.com/home ), a global leader in human resource consulting and related services; and Oliver Wyman ( http://www.oliverwyman.com/index.html ), a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc ( http://twitter.com/@Marsh_Inc ).