In the second quarter of 2024 (Q2 2024), Asia’s insurance sector experienced a notable decline, with the composite rate falling by 3%, according to Marsh’s latest report. The decrease was observed across various lines of business, including property, financial and professional, and cyber insurance.
Property Insurance Rates Drop
Property insurance rates in Asia fell by 2% during Q2 2024, marking the second consecutive quarter of year-over-year declines. This reduction is attributed to intensified competition for property risks. Despite some clients benefiting from lower rates, insurers continued to increase rates for risks with high exposure to natural disasters. There was a particular focus on inflation and the accuracy of declared values, especially concerning business interruptions. In response, clients turned to captives and alternative risk solutions, possibly opting to retain more risk in high-loss areas.
Casualty Insurance Sector Remains Stable
Casualty insurance rates decreased by 1%, with stable capacity available in the market despite the entry of a few new players. North American exposures were scrutinized, while auto liability and workers’ compensation rates held steady. Notably, increased claims activity was reported in Hong Kong and Singapore.
Financial and Professional Lines Experience Significant Declines
Financial and professional lines saw a 9% reduction in rates. Directors and officers (D&O) liability rates continued to influence overall market conditions within these lines. The ample capacity for D&O coverage has spurred competition, leading to average double-digit decreases in D&O liability renewals in markets such as China, Hong Kong, South Korea, and Singapore. Additionally, limited capital market activity has constrained insurers’ opportunities for new business, exacerbating competitive pressures at renewal. Rates for financial institutions (FIs) and professional indemnity (PI) insurance saw average declines in the range of 10% to 15%.
Cyber Insurance Rates Fall
Cyber insurance rates dropped by 6% during Q2 2024, driven by new capacity in the Singapore market and increased interest from the London market. This has intensified competition and expanded capacity. Insurers maintained stringent requirements for robust cybersecurity controls and improvement plans, but displayed greater flexibility in how this information was communicated. There was also a heightened focus on risks associated with AI usage, with insurers generally offering broader coverage options.
Overall, the Q2 2024 insurance market in Asia faced a downward trend across multiple lines, driven by competitive pressures and shifts in market dynamics.
