AIR+27 Nov 2019

A new dawn for liability in Asia?

| 27 Nov 2019

Reinsurance broker New Dawn Risk aims to provide insurers in Asia with greater provision to write liability risk through broader reinsurance treaty arrangements.

Speaking to Asia Insurance Review in Singapore recently, CEO Max Carter says the firm, which does all classes of non-marine liability business, is looking to expand its footprint beyond West Asia and into East Asia.

Aided by a benign loss environment over the last two years, the liability space in Asia represents an attractive area for specialist insurers to grow in, he said. 

However, many insurers in Asia have had to depend on facultative covers for their liability business especially in more complex classes such as professional and financial lines.

“Domestic companies typically do not have broad arrangements for liability on a treaty reinsurance basis…they usually rely on their bouquet treaties for primary reinsurance needs and supplement that with the facultative market especially in the liability space,” said Mr Carter. 

As a result, Asian insurers have been somewhat hampered in expanding their liability offerings and it is an issue which New Dawn Risk believes it has the ability to address – through a high level of service and in depth product knowledge.

“We think there is an opportunity in the liability space for forward thinking insurers to get reinsurance treaties that give them the ability to compete on a level playing field with the big international players that are already operating in these markets,” he said.

“We also help insurers to retain more risks themselves and rely less on the facultative market, and build expertise internally to underwrite these classes of business.”

Opportunities in liability

The lack of regulations on things such as data protection for example, has meant that the liability insurance market in Asia has not grown as quickly as that of North America and Europe. However, New Dawn Risk believes that the mindset of corporates are changing when it comes to cyber risk covers, professional indemnity and D&O, and sees opportunities in fast-growing economies such as the Philippines, Indonesia, Thailand and Taiwan.

Liability rates in Asia have been fairly stable in recent years given the positive loss scenario, although prices could start to harden, said Mr Carter.

“Liability rates in Asia are still fairly low but we are getting to the point where capacity is getting scarcer which means that reinsurers will look to divert their capital into the most profitable areas, so I would be very surprised if we don’t see a firming of liability rates in Asia in the next 18 months – even if the underlying fundamentals have not changed significantly.”

He added that with intense competition in the reinsurance market, reinsurers which are prepared to think out of the box would be the ones to prosper.

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