Asia: Outlook positive for demand for transactional risk insurance in 2023
Source: Asia Insurance Review | Apr 2023
Demand for transactional risk insurance solutions in Asia is expected to remain steady in 2023, and may even improve, said Marsh.
Presenting the outlook for 2023 in its ‘Transactional risk insurance 2022: Year in review’ report, Marsh says that premium rates are anticipated to continue to drop from their previously elevated levels in 2021. This is mainly due to the expansion of market capacity for W&I insurance and the arrival of new insurers generating increased competition.
Insurers will also be incentivised to turn to meaningful product differentiation as a way to improve upon and retain their market shares. Similarly, for tax insurance, the use of cover to mitigate tax risk arising from M&A transactions is expected to grow in 2023, driven by a wider understanding of this product in the region in recent years coupled with a rise in insurers’ appetite to insure Asian tax risks.
Developments in 2022 in Asia
In spite of challenging circumstances, including global macroeconomic and geopolitical pressures, transactional risk insurance placements in 2022 remained resilient. The placements in Asia were helped by the continued stability of Southeast Asia’s M&A market and the strength of the market in India.
Overall, closed deal counts decreased only slightly – by 12% – compared to 2021’s record-breaking levels, total limits placed grew by 35.6% over the previous year, and the combined number of primary and excess policies placed by Marsh Asia increased from 197 in 2021 to 205 in 2022.
Asia has traditionally been relatively underserved, in terms of dedicated W&I insurance capacity; 2022 started with only six insurers having underwriters based in the region and core appetites for Asia transactions. Over the course of 2022, insurers (such as Mosaic Insurance, RiskPoint, and Volante Transaction Services) made new investments in the region, with a view to joining the incumbents on the ground.