Asia-Pacific insurers have relatively little direct exposure to the Middle East, but they are still being affected indirectly, mainly through financial market volatility, according to S&P Global Ratings (S&P).
Extended supply-chain disruptions could slow economic growth, push up inflation and increase insurers’ operating costs. These risks remain manageable under its base-case scenario, though they could intensify if disruptions persist over a longer period.
Some Asia-Pacific reinsurers do have exposure to the Middle East through broker-led platforms, specialty risk treaty programmes and retrocession markets. Given the lag in loss reporting, several reinsurers have started strengthening their reserves, aligning with their large-loss budgets for 2026, the report said.
Primary insurers in the region may also face some impact through marine and cargo policies, particularly where trade routes pass through the Middle East. However, these lines generally make up a small portion of overall premiums: typically around 1% to 5% across most Asia-Pacific markets, the report said.
An exception is Singapore, where its role as a major shipping and insurance hub means marine and cargo business accounts for a more significant share, contributing roughly 10% of premiums in recent years. Insurers in the market are expected to continue relying on reinsurance to manage exposure to large marine-related losses.
S&P also said that investment market volatility is the most significant indirect risk facing Asia-Pacific insurers amid ongoing geopolitical tensions.
Any escalation could further unsettle capital markets and foreign exchange movements, leading to greater fluctuations in both capital positions and earnings. That said, insurers in the region are generally well-capitalised and are expected to have sufficient buffers to absorb such volatility.