Rise in premium growth plus low insurance spells opportunity for Asia Pacific, Aon Benfield says

Aon Benfield, a global reinsurance intermediary and capital advisor of Aon plc, has launched its Welcome to Pacific guide, which examines sixteen of the region’s growing insurance and reinsurance markets to identify growth opportunities.

“As rapid economic development, population growth and urbanization lead to increased insurance penetration, Asia Pacific represents a key area of growth in the global marketplace,” Aon Benfield said on Thursday.

Aon Benfield’s Insurance Risk Study listed five Asian markets in the top 10 of its Country Opportunity Index, which identifies the world’s most promising property and casualty markets. Singapore comes third in the list of 50 countries, immediately followed by Hong Kong, Malaysia and Indonesia.

“With an insight into economics fundamentals, rating agency perspectives, political cultures and regulatory environments for local and foreign investors, this guide serves as a snapshot into the 16 countries for global market insurers and reinsurers seeking diversification or Asian firms looking for multi-national expansion,” Aon Benfield said in a statement.

The findings show that India and China enjoyed the highest compound annual growth rate (CAGR) of non-life premium at 21% and 20% respectively from 2009 to 2013. Thailand, Vietnam and Indonesia also enjoyed significant growth with CAGR above 15%.

While developing markets in Asia Pacific enjoyed fast growth, the report also reveals that insurance penetration rates remain low. For the year ended 31 December 2013, non-life penetration rates for India (0.6%), China (1.1%), Vietnam (0.7%) and Indonesia (0.4%) were below the 1.4% Asia Pacific average, and well behind developed markets in this region such as Australia, New Zealand and Korea.

“Rapid economic development, population growth and urbanization – combined with rapidly evolving insurance regulation – will lead to increasing insurance penetration,” said George Attard, head of Aon Benfield Analytics for Asia Pacific, in the statement. “While this will create the potential for significant organic growth, there is also a notable opportunity for growth in specialty lines and product innovation. With many insurance and reinsurance companies already investing in this region and seeking to take advantage of the growth opportunities, an expert insight into these markets is crucial.”

Malcolm Steingold (left), CEO of Aon Benfield for Asia Pacific, added that the “greatest opportunity, not only for 2015 but for the immediate future, is the development of new products to cater for the expanding universe of risk and also to increase penetration into uncovered conventional risk across the region.

“The scale of the opportunity varies substantially from country to country and is due to a combination of factors including GDP growth, level of insurance penetration and the size of the population. Taking these factors into account, China and Indonesia stand out with other Asian economies showing significant potential.”