Asian News - ASEAN: Steady growth foreseen in three major markets this year
Source: Asia Insurance Review | Jan 2016
Insurance market growth in Indonesia and Malaysia is expected to be stable this year while it is forecast to be modest in Thailand, according to Fitch Ratings. They are the three largest markets in ASEAN after Singapore.
The international rating agency expects growth in the Indonesian market to stabilise on the back of real GDP growth of 5.3% forecast for this year and 5.5% in 2017 from 4.8% in 2015. Growth in the life and non-life sectors will be underpinned by steady demand, manageable investment risks among insurers, and adequate buffers against catastrophe losses through reinsurance coverage.
Low insurance penetration and growing awareness will continue to support life insurance growth while the non-life insurance sector is supported by rising affluence and disposable incomes among the population, economic recovery and protection from reinsurance coverage.
In Malaysia, the insurance and takaful sector will remain stable in 2016, as the industry’s solid capitalisation will support growth and potential underwriting volatility even as economic growth decelerates, said Fitch. The sector’s strong capitalisation is built on the robust regulatory framework and capital practices required by the Malaysian regulator.
Fitch believes stable domestic demand and low insurance penetration will continue to support general insurance and takaful. It expects life insurers to increasingly tap on health-related and retirement products as the population ages and medical costs rise. Growth in investment-linked policies is likely to stay strong given the low interest rates.
In Thailand, rising demand for insurance protection from an ageing population and increasing household wealth would support insurance premium growth.
The favourable demographics and tax reduction benefits, supported by solid distribution platform, are supportive of solid growth for life insurers. The expanding middle- to high-income segment of the population is also likely to stimulate more demand in endowment and wealth protection products. At the same time, rising life expectancy will spur growth in health and medical insurance. Non-life insurers should also experience steady growth in the medium to long term, although modest growth is likely this year due to the weak economy.