News Reinsurance10 Sep 2019

Insurance in China and India likely to grow significantly, says Hannover Re


Despite the insurance industry facing the double challenges of surplus capacities and historically low interest rates, Hannover Re anticipates that the level of insurance in China and India will probably surge sharply given factors such as their population density, a rapidly expanding middle class and the associated increase in asset values. These two markets are considered very important to the reinsurer.

For the 1/1 treaty renewals, it expects appreciable rates of increase in the medium to long term not only in property and casualty insurance but also in the area of health and provision for China and India.

Overall in the Asia-Pacific region, Hannover Re expects that appropriate insurance solutions will be designed in order to further boost insurance density amid the exposure to natural disasters. It said that narrowing these protection gaps opens up opportunities for insurers and reinsurers alike to underscore their social relevance.

When it comes to Nat CAT risks, the reinsurer anticipates the following developments:

  • Significant price increases will probably be seen again in Japan in 2020 in view of the poor run-off. The country has seen appreciable price increases recorded for catastrophe covers in the current year. Three sizeable natural disasters in Japan affected not only the aggregate covers of cedants but also their catastrophe XL programmes. Most notably, Typhoon Jebi had a considerable influence on the observed sharp rate increases.
  • Rates in New Zealand will probably stabilise against a backdrop of rising demand for capacity given how past earthquake losses in the country have had this effect.
  • Prices in Australia will be softened slightly as Hannover Re is able to obtain more attractive prices than the market as whole based on its standing as a reinsurer with a “very good rating, long-standing expertise and excellent business relationships”.

Global overview and outlook ahead

According to Hannover Re, global prices and conditions have nevertheless taken an appreciably more pleasing turn in 2019 compared to just one year earlier. Particularly on the primary insurance side, it observes modest improvement across a broad front which in some areas is also reflected in reinsurance business. The effects of this recovery are, however, still muted.

"In recent months, we have been able to secure initial price increases across the board. The renewed drop in interest rates and the considerable strains from large losses underscore the need for improved prices and conditions in the upcoming year's renewals. Given the challenging market environment that we are still facing, we shall continue to keep a very close eye on price and risk adequacy and will put profitability before growth," said Hannover Re CEO Jean-Jacques Henchoz.

According to the reinsurer, the decline in rates in the years up to 2017 has continued to affect the technical results posted by the entire industry which came under added strain from further considerable large losses in 2018 and the need to set aside additional reserves for prior-year losses.

It noted that competition on the reinsurance market remains intense and surplus capacities are still the norm. With the profitability of the sector coming under increasing pressure, it sees technical discipline on the underwriting side remaining the top priority. 

Hannover Re still anticipates improved prices and conditions overall for the treaty renewals as at 1 January 2020.  It is also satisfied with the business renewed to date in 2019 and particularly identifies attractive growth opportunities in Asia, first and foremost in China. In the present climate, it continues to concentrate on its core competence as a traditional reinsurer, supplemented by individual coverage concepts.

“Emerging markets, in particular, still offer vast potential in terms of the insurability of risks and medium- to long-term growth," said Mr Henchoz.

In view of the business development so far in the current financial year, Hannover Re considers itself well on track to achieve its 2019 targets of a single-digit percentage increase in its gross premium volume and net income in the order of EUR 1.1bn ($1.2bn) for its total business.

| Print | Share

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.

 

Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.

Other News


Follow Asia Insurance Review