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The reinsurer’s specialty CUO Anne Lohbeck says engineering, inherent defect, cyber and credit & surety are growth drivers for APAC specialty book.
Engineering and construction, cyber, and credit and surety are key growth drivers for specialty lines of business in Asia Pacific, according to Anne Lohbeck, Swiss Re’s chief underwriting officer specialty.
“Asia already is an important part of our specialty book,” said Lohbeck.
Engineering and construction is a class, where she expects the most growth on a global scale coming from APAC due to the large need for infrastructure investments.
Globally, construction output is expected to grow by over US$4 trillion over the next 15 years, with China, the US and India contributing just over half of that growth.
“So that gives you a perspective on how important the APAC region is for engineering and construction growth in the next few years,” she said.
“There are general infrastructure developments. And then there are also specific infrastructure developments in energy provisioning and green energy transition that will largely fall into the engineering and construction markets, some of that also falling into marine depending on how the risks are suited.”
An emerging line of business in a number of geographies across APAC is inherent defect insurance, which is a sub-segment of engineering and construction becoming compulsory, according to Lohbeck.
Inherent defect insurance guarantees against defects in high-rise buildings and larger developments, typically for 10 years. “So it is long-tail coverage,” Lohbeck noted.
“We view it as a really important contribution to societal resilience. It has become mandatory in a number of cities in China. There are discussions in a number of jurisdictions and we have rolled out products in the number of markets,” she added.
“There is already significant volumes in the region. Japan has had an IDI Insurance pool since the late 2000s, there are 40 cities in China that are about to adopt it. Mauritius has IDI coverage now. So there’s quite a bit happening along that front and quite a bit of additional countries that have it,” according to Lohbeck.
Cyber insurance is another business seeing strong growth in a number of regions.
“The two most developed markets from our perspective are Japan and Australia. But we also see demand in other markets. We see a number of clients who want to start embedding small cyber offerings into their suits. So that is something where we are expecting quite a bit of growth from.
“It’s going to be big. So clearly an important driver for Asia,” she noted.
“The third one is around credit and surety, which is as a facilitator of global trade as a stabiliser with trade credit products with political risk, which also helps in mitigating against geopolitical instability. So that’s also an area where we’re seeing quite some demand and also specifically from Asia,” Lohbeck said.
Surety market is very much driven by regulation, and trade credit, generally, is a market that Swiss Re sees decent growth rates in the region.
“We also see continued protection gaps, namely in nat cats, but they also do exist with regards to the other perils and the other drivers of the specialty markets. For Asia, I think there is scope to grow by closing the protection gaps,” she added.
Renewals
While Swiss Re sees continuation of the status quo in the upcoming renewals, there have been notable losses in Asia Pacific that will be reflected in the pricing.
“We’ve had quite a few claims here in Asia. The Jinko Solar plant fire is an over US$200 million claim. This was one of the largest solar panel production plants in Asia and we’ve had a fire there. It’s a relevant one for the industry.
“We had Typhoon Yagi, where we saw significant damages to solar power plants as well as to offshore and onshore wind farms. We had Baltimore Bridge incident for which the cover for the vessel was placed in the Asian market,” Lohbeck said.
Those are all quite meaningful large losses that will impact the Asian insurance and reinsurance markets and “they find their way also through to pricing”, she added.
“An interesting observation this year is if you look at large losses, generally, there is a good share in Asia as well so that there needs to be some reflection of that,” she added.
The nat cat losses around the region are also expected to be reflected in the renewals, Lohbeck said, noting that “some effects from the property space also impacting specialties because of shared capacity as clients and brokers and reinsurers place that jointly”.
Specialty lines of business that have a nat cat component such as engineering and marine energy are ultimately dipping into the same capacity pools as property cat so it will be interesting to see just how that pans out. That’s a market question more than anything else, she said.
“There are general infrastructure developments. And then there are also specific infrastructure developments in energy provisioning and green energy transition that will largely fall into the engineering and construction markets, some of that also falling into marine depending on how the risks are suited.”
Anne Lohbeck, Swiss Re
As for developments within the specialty lines of business around wordings and conditions, she said: “We’ve had developments now for a number of years, such as energy transition geopolitical instability, tensions, sanctions, ESG. None of those are new.”
“We’ve seen those unfolding over a number of years now and there are some evolving things that we need to continue catering to, also in insurance and reinsurance relationships, but I don’t think we need to invent anything fundamentally new.
“I really expect the continuation along the lines of where we have been and no big surprises that are moving the market,” Lohbeck added.
Global trends
There are “two-and-a-half drivers for specialty reinsurance globally”, Lohbeck said.
“One big one has been and continues to be geopolitical instability. We have the US elections, it would be interesting to see what happens on that front and the second one is economic uncertainty, globally.
“Geopolitical uncertainty, sanctions, war coverage, then economic uncertainty, the necessity to facilitate global trade, to support anything that touches the credit and surety markets,” she added.
“The third, or the half factor, has been natural catastrophes,” Lohbeck continued.
“We sometimes forget that the specialty space, namely the marine and energy, as well as the engineering and construction markets, is also impacted by nat cats and sometimes by secondary perils or by loss scenarios that we were less aware of such as sand storms that we’ve had in the Middle East that scratched the surfaces of solar panel, or such as flooding in unexpected places that impact energy infrastructure.”
These are “three sources of volatility and uncertainty but also three drivers that I think currently are very prominent in the public debate and that have made people more risk aware”.
“So we have seen that also driving insurance and reinsurance demand,” she explained.
Emerging risks
“I would say with cyber very clearly we’ve seen a world that is becoming much more interlinked with data, information in the cloud with artificial intelligence as these technologies emerging, the threat levels and the potential scenarios of risks are evolving and getting larger,” Lohbeck noted.
She noted that protection in the cyberspace has not been keeping up with technological development at an equal pace.
“I think it’s fair to say that currently for cyber specifically, we do see the market growing. But we also see the protection gap growing and it will be interesting once those two drivers get at the same pace.
“At some point in time, we as an industry can raise awareness to start catching up with that protection gap that is something very real and that is projected to become as relevant, if not more relevant than protection against natural disasters, at some point in the future,” she added.
Political violence is another emerging risk that needs to be monitored.
“With the Ukraine conflict and now with the events in the Middle East, I think we’ve seen some heightened sensitivity around that product. And the way the market has reacted is to first and foremost increase transparency on both exposures. I think that for the entire market, it is a really important element,” she said.
While there is no question on the potential for cyber growth in the region, for take-up to increase the market needs to develop products that are relevant to local clients.
The Asian cyber insurance market needs to build local expertise to drive growth in the region, according to Anthony Cordonnier, global co-head of cyber at Guy Carpenter.
“Different countries have very different exposures, different ways to do business as well. So I think we need more local expertise to actually develop products that are relevant to local clients. And I think that will lead to a better take-up of the products,” he said.
For Asia, “I don’t think education needs to come from the outside. At this stage, I think there needs to be local underwriting teams in their markets actually looking at the risks,” he said.
At the moment if you look at Asia, the penetration is very low compared to more mature markets.
There has been a bit of standardisation around wordings and pricing in the cyber market in Asia, because it has been developed on the back of reinsurers investing into the region and bringing the outside knowledge.
Cordonnier said the cyber market is seeing rating reductions in the market following the sharp spike seen starting 2020, while there has been modest exposure growth.
“After quite a few years of hard market in cyber, there has been just a bit of a pause in the rating environment. The reductions, however, are at a much slower pace than the increase in rates we had in the preceding years,” he noted.
Cyber is a profitable class of business, still is, Cordonnier said, adding that however, in terms of products, we’re seeing that there’s perhaps not as much growth as there was in previous years.
“Exposure has not really grown so much in the last couple of years. You have rates coming down, the premium staying the same, which means that there’s probably a bit of exposure growth. So it could be new buyers or existing buyers buying a bit more. So that’s kind of offsetting the rate environment,” he said.
“This is modest growth,” Cordonnier said.
The cyber reinsurance market is also reshaping as the nature of risks is changing.
“Cyber was a longer tail line of business before ransomware, similar to casualty, shorter tail than casualty, probably a little bit shorter than financial lines as well. Whereas now, cyber is seen as a cat-exposed short-ish tail line of business,” he noted.
“Once cyber becomes big enough in a cedent portfolio, then it warrants its own solution and that solution might not look like a casualty solution, especially because of the cats elements, we are seeing event-based covers, for example,” he added.
“Cyber was a longer tail line of business before ransomware, similar to casualty, shorter tail than casualty, probably a little bit shorter than financial lines as well. Whereas now, cyber is seen as a cat-exposed short-ish tail line of business.”
Anthony Cordonnier, Guy Carpenter
Rating environment
“Rates softening is a result of the traditional insurance and reinsurance cycle playing out here,” he explained.
“You had a market that was growing fast, that changed very rapidly in terms of exposure because of ransomware, which took everyone by surprise. Rates reaction was significant, was fast and there was a tightening in underwriting rules and limit deployment.”
This drew new players to the markets, which then created an environment where you had more capacity, which led to an easing of rates.
“Currently, there’s discipline in limit deployments, in underwriting and underwriting checks,” he said.
“Limits have increased again, but not as much as pre-2020. Now the market withstands much greater limits and I would say the average limit in the market is lower now than it was in 2019, so there’s a lot more balance,” added Cordonnier.
Ransomware
One of the key drivers for rating growth in the past was ransomware activity, which he said is still there but it has been priced in and that’s an exposure underwriters understand.
“Around privacy liability, where we’re seeing continued focus, especially in the US, in using privacy laws to go after companies. And that’s causing some of the tail in cyber, that’s where we draw the distinction between the US and and outside the US.
“In particular, around Asia where those privacy trends don’t really exist, cyber remains first-party, ransomware coverage,” he noted.
Japan, for example, where there is limited exposure to ransomware, the liability environment in Japan is very different from that of the US, so the losses in Japan come from commercial settlements of liability through so-called apology money.,
“This is different to the nuclear verdicts or social inflation-driven trends which don’t really apply in Japan or most of Asia for that matter,” he noted.
Regulations in the region have had limited impact, simply because the liability regimes are just culturally not as aggressive as the US.
Guy Carpenter’s cyber team has about 40 professionals globally in broking, analytics, wordings experts, cybersecurity experts, perils experts, and threat landscape experts.
“We build that practice that has all range of professionals supporting our client base worldwide. I think the true differentiating factor that we’ve got is local expertise in all the regions where we operate in Asia,” said Cordonnier.
Jessica Schappell, head of Asia Pacific at Beazley, outlines her vision for the region, focusing on deepening market penetration, leveraging a well-established team, and expanding the property and cyber insurance footprint.
“Asia is not new to me, even though the role is quite new. Being here for a number of years before moving into this role has given me the opportunity to really understand all the markets in the region,” Schappell told IAN.
Schappell took over the role on August 1 but has been with Beazley’s Singapore Office for almost six years now, leading the carrier’s international financial lines and cyber claims team.
She highlighted the strong foundation she inherited: “I took over a very well-oiled machine in the region. My predecessor did a very nice job in building the team out, both [in terms of] people and products, and expanding that over the last five-six years.”
Beazley will be focusing on growing its property footprint in the region further after having made three hires this year, according to Schappell. This path is also aligned with the carrier’s regional strategy.
“We feel that we have a lot of experts across the globe within Beazley in the property space to do that in a strong way,” she said.
Cyber will also be an important cornerstone in the carrier’s growth strategy in APAC.
“From cyber perspective, we have a lot of large clients who are buying. Cyber insurance demand is expected to be US$40 billion by 2030. We want to be at the forefront of that growth,” Schappell said.
Beazley will be focusing on growth next year and looking to fill the market with products that may be missing from the region.
“We’ve seen some softening in financial lines last year, but we’re developing new products and looking for profitable growth,” she said.
The new products will combine tech and financial lines, such as Full Spectrum Cyber as there is more demand expected among SMEs. The most recent example is Cyber Flex, launched globally, that combines liability, crime, and cyber for financial institution clients.
“Initially, we’re looking at deeper relationships and penetration, especially as a specialist insurer. That’s where we can really shine and add our value because we are experts in those various lines of business.”
Jessica Schappell, Beazley
In terms of regional expansion, Schappell is looking at further market penetration in the core regional markets for each of the specialty carrier’s lines of business.
Now Beazley operates on a hub model with office in Singapore that services the Asia Pacific market with no plans to grow office-wise.
Singapore and Hong Kong are Beazley’s core markets where it writes direct insurance.
“Initially, we’re looking at deeper relationships and penetration, especially as a specialist insurer. That’s where we can really shine and add our value because we are experts in those various lines of business,” Schappell said.
She emphasised the importance of understanding the regional markets and building strong relationships with clients.
“Clients are asking more and more to meet their claims manager before something happens, which we always welcome. It’s an opportunity to build a rapport and enhance our knowledge before clients face any hardships down the line,” she said.
The importance of understanding risks and underwriting expertise is also becoming more and more important, Schappell noted.
“Globally, we have grown and put a lot of resources into growing our property book, and that’s similar here. It goes back to really understanding the risks and being able to use the underwriting expertise to make a judgment call,” she said.
Talent remains a notable challenge for the carrier as “the market is small and finding the right person can sometimes be difficult.”
“We’ve been very fortunate in building a strong team across all our lines of business here in the region,” Schappell said.
The broker is opening soon in South Korea and plans to “build pretty deep there”, and has some other plans in other territories to go too, said Ron Whyte.
GIC-backed Miller Insurance is expecting to continue its recent rapid growth in its APAC Singapore hub with more people hired over the next year, as well as continued regional geographic expansion in Japan and South Korea, according to Ron Whyte, head of Miller Asia.
‘We’ve covered most of the product lines now, so it’s really about building teams,” he added.
“What’s interesting is that we had four registered people at this conference two years ago and we have 27 now,” he told InsuranceAsia News at this year’s Singapore International Insurance Conference (SIRC).
“We’ve been trying to build a hub in Singapore as part of a hub and spoke strategy, which involved Richard Broad joining as head of treaty, based here. There are seven of them now and they’ve had a great year.”
The broker established its Asia Pacific treaty team in September 2023 with a hire of a team from Lockton Re, led by Broad, who was previously head of reinsurance for Lockton APAC, alongside four others, Bruce Ford and Pei Nee Goi in Singapore and Jo Garnett and Hui Sin Low based in Malaysia.
Since then it has continued to expand its regional treaty presence, most recently with the hire of Mandy Phan from Guy Carpenter in July this year.
“We were just property fac four years ago. Now we’ve got marine, energy, cargo, financial and professional lines, credit and political risks, and sports & entertainment,” industry veteran Whyte continued.
Regional expansion
“Geographically yes we want to expand but we’re pretty measured about the way we go away it,” he added. “At the moment we’re in Japan and we’re expanding there and going deeper, adding non-marine and we’ll grow that out. We are a broker and we’ll look to add the agency side.”
“We’re opening soon in South Korea and we’ll build pretty deep there, and we’ve got some other plans in other territories to go to,” he added. “But we’re not in any hurry. We have long-term backing and the most important thing is if we do something we get it right. We get the right partner, the right people. We’re unashamedly extremely thorough about everything we do. Sometimes it feels as if we’re not moving that fast, but then I look up and as I said we were four just two years ago and now we’re 27, so we must be doing something right!”
“We have long-term backing and the most important thing is if we do something we get it right. We get the right partner, the right people. We’re unashamedly extremely thorough about everything we do.”
Ron Whyte, Miller
Whyte said that both Japan and Korea are currently experiencing “extraordinary growth” in their broking markets.
“Japan- nothing ever moves dramatically fast there, but there are some quite significant changes coming and the role of the broker will be much greater. In Korea, the growth of the broking business is something like 20% a year. Actually, both of those economies are pretty flat, but they are very mature markets. Korea has insurance penetration levels akin to Western European levels, and the size of the non-marine market is similar to the UK, but the broking market is about a fiftieth of the size, so there is that potential, and that’s exciting.”
Specialty focus
Also speaking to IAN was Shaun Sinniah, global head of Reinsurance, who provided some wider context to the changes.
“Treaty is pretty nascent for Miller from the position we had prior to going into Willis at that point,” he said. “A lot of what people were trying to do was recreate that original magic by focusing on specialty lines business and niches in the market which are underserved by not only the global firms but also by the more challenger broker space. I don’t think we really have the intention to go after large global property cat programmes or for an Aon or a Carpenter. I think for us it’s more ‘where can we be meaningful to a limited number of cedants in a territory? Where can we go deeper rather than wider?’”
“With that comes international expansion,” Sinniah added. “And unlike other challenger brokers, I think Asia Pacific is the first cab off the rank, not the third or fourth. So it’s not a London to Europe strategy for us, it’s very much a London and Asia Pacific strategy.”
The carrier eyes significant growth opportunities across India, China, Thailand and Indonesia as it plans to cement its position as a leading regional player.
Axa XL is on track to achieving an ambition to double the size of its Asia portfolio as part of a five-year expansion strategy with continuing regional expansion, according to Gilles Fromageot, CEO, Asia.
“In Asia, we are growing quite significantly,” he told InsuranceAsia News at the 20th Singapore International Insurance Conference in Singapore.
“Our intention is to double the size of our portfolio between 2021 and 2026 and we are well on track. How do we double-down? It’s by expanding in different geographies, so we are growing first of all in our Singapore and Hong Kong hubs, and also beyond that. We plan to accelerate in India, and to collaborate even better with our GI sister companies in countries like China, Thailand, or Indonesia.”
“In the region, we see still growing demand for all lines of business because Asia is the worldwide economy engine. There is demand for construction; there is demand for political risk and trade credit because there is a lot of financing; there is growing demand in property because the size of the properties is increasing and the insured values are increasing; and semiconductors in Thailand remain very important for us.”
On the liability side of the fence too, Asia offers enticing prospects, according to Fromageot.
“Asia is exporting more and more to rest of the world, exporting more and more high-value goods. Higher value means higher complexity, which means higher liability. And then we see an increase in demand in lines such as cyber, as well as financial lines – especially D&O insurance as more and more Asia companies are listing in New York, and not only on the Hong Kong Stock Exchange, for example.”
“Many competitors can bring in capacity, but not that expertise in underwriting, not that claims capability, and the capacity to build and develop global programmes out of Asia.”
Gilles Fromageot, AXA XL
“There is also a slightly growing demand for global programmes, captives, and these kind of solutions that Axa can provide,” he added.
“We are growing a lot in financial lines and speciality lines as a whole. The increase of trade, and marine trade in the region, is a very important opportunity for us and we are one of the largest cargo players in the region. Asia remains a very important growth opportunity for Axa XL in the world.”
Full service proposition
Fromageot added that key to the company’s value proposition is being able to underwrite out of Asia most of its product range “except a few very, very niche products that Axa XL can offer in other parts of the world, we can underwrite any single risk out of Asia. So that’s the property-casualty space, energy, construction, political risk, political violence, terrorism, marine cargo, marine hull, etc etc.”
However, Fromageot noted, more importantly for Axa XL is the ability to offer claims services across countries… and we can serve all clients from this region using local languages and the same time zone, not out of London or somewhere else. And I think this is a critical piece of our value proposition and our competitive advantage compared to many of our competitors.”
“Many competitors can bring in capacity, but not that expertise in underwriting, not that claims capability, and the capacity to build and develop global programmes out of Asia.”
Structured solutions
Also speaking to IAN was Todd Wilhelm, head of Specialty, Asia at Axa XL, who addressed the question of whether structured solutions – so much a talking point of last year’s SIRC – were still on the table for the wider regional market.
“I think there’s outward interest in structured solutions but not many deals being done,” he said, suggesting that while clients and brokers are actively exploring them not many are actually being executed, in part because the rate is relatively low, but also because these deals tend to be quite complex, and for many out there in the market managing such a change is challenging.
The relative volatility of such transaction is also a factor, he suggested: “Do people want to take that risk? They can make money out of it, but they can also lose money.”
As insurance penetration grows, there is a need to better understand the insured exposures and vulnerabilities in these regions, says Perils’ Darryl Pidcock.
While earthquakes and typhoons have historically attracted the most attention from a risk modelling and capacity perspective, the increasing frequency of loss events caused by other perils such as severe convective storms (SCS), flooding and hail is driving demand for more comprehensive data to support model development in Asia Pacific (APAC), said Darryl Pidcock, head of APAC and cyber, Perils.
“The insurance industry needs to better understand the impact of the severity and frequency of cat events, factoring in things such as climate change impacts.
“As insurance penetration grows, and development becomes more concentrated in certain regions, greater granularity and more timely data is needed for exposures (insured values) and vulnerabilities,” Pidcock said.
A recent analysis conducted by Perils focused on Queensland hailstorms, plotting hail size against damage degrees and identifying how each event can vary from a vulnerability perspective. One key finding revealed that regulatory requirements for cyclone-resilient roofing significantly increased insured claims following a hailstorm. This highlights the critical importance of high-resolution exposure and loss data in understanding regional vulnerabilities.
Pidcock noted that the insurance industry is presented with opportunities to collaborate with key stakeholders and become more innovative with how it manages data.
“There are examples of the industry already using AI as a tool for data management but arguably is still in its exploratory stage.
“The insurance industry needs to source various datasets including relating to climate change influences, exposure and vulnerability data whilst becoming more innovative in how it sources and uses this data.”
Darryl Pidcock, Perils
“From Peril’s perspective, the focus is to continue expanding our reporting of industry exposures and losses in close collaboration with the industry but also enhancing the datasets and tools available to support the industry better understand risk exposures and vulnerabilities in a timelier manner,” he said.
The urgency for robust data is particularly pronounced in fast-developing countries across Asia, where the economic landscape is rapidly changing, according to Pidcock. Areas in Southeast Asia and India are experiencing significant growth driven by manufacturing and infrastructure development, yet insurance penetration remains relatively low.
“As an example, year to date from an economic loss perspective there are three Asia cat events in the global top ten, these being China summer floods, Typhoon Yagi and the Noto Peninsula Earthquake in Japan.
“Whilst economic losses are currently estimated at approximately US$50 billion from these events, insured losses to date are estimated at only US$5 billion.”
As insurance penetration grows over time, there is a need to better understand the insured exposures and vulnerabilities in these regions.
“Whilst we know typhoons and earthquakes often have a devastating impact, the increasing frequency of flood and storm-related events needs to arguably be better understood.”
Besides, with urbanisation creating more concentration of exposures and manufacturing development concentrated in many Cat-exposed regions, timely and reliable data becomes even more critical to support development of Cat models.
“The insurance industry needs to source various datasets including relating to climate change influences, exposure and vulnerability data whilst becoming more innovative in how it sources and uses this data,” said Pidcock.
Civil commotion and political instability are additional factors that reinsurers must consider, said the chief underwriting officer.
As the reinsurance industry braces for upcoming renewals, Piotr Nowakowski, chief underwriting officer at Peak Re shares his perspectives on market trends, climate change impacts, and the company’s strategic plans in the Asia Pacific region.
The impact of events like Hurricane Milton and the floods in Germany/Central Europe is expected to drive rates up on affected businesses, particularly in cat-prone areas, Nowakowski told InsuranceAsia News (IAN).
There could be changes in policy wordings or specific negotiations around secondary perils e.g. hail in the coming renewals, Nowakowski said, as those perils remain one of the most significant concerns, particularly in Asia (Australia, recently Japan) and Europe.
However, the situation varies as “each and every market is different”. In Japan, for instance, the cat loss history has been favourable for the last few years, which might exert pressure to reduce rates unless there is significant growth in exposure.
Nowakowski pointed out that while the frequency of events may not be increasing, their severity certainly is, adding that secondary perils “come to the front of the stage”.
Peak Re is licensing major vendor models for nat cat and is doing its own assumptions and nat cat modelling. The company has also hired a meteorologist to integrate climate change considerations into their pricing and underwriting strategies.
The retro market is likely to remain stable in 2025, with some potential for light softening as it is “always a little bit ahead of the reinsurance market.
“There is capacity on the retro market, and the capacity needs to be efficiently allocated. The business we are writing from the property side should be profitable to cover the cost of the retro we are buying for our portfolio,” Nowakowski said.
Civil commotion and political instability are additional factors that reinsurers must consider as the political and social environment in each country can significantly impact risk assessments.
“We cannot apply the same standard for each market,” Nowakowski explained, citing examples of unexpected riots in some countries. In Asia, some markets are seen as more problematic due to political instability.
Despite these challenges, Peak Re remains committed to expanding its presence and deepening its relationships with clients. In some developing markets, Peak Re is taking a cautious approach, focusing on building deep relationships before expanding its business.
“There is capacity on the retro market, and the capacity needs to be efficiently allocated. The business we are writing from the property side should be profitable to cover the cost of the retro we are buying from our portfolio.”
Piotr Nowakowski, Peak Re
“The priority for us should be to increase the relationship with existing clients… and then obviously new clients from existing markets,” Nowakowski said.
“There is no rush to write the business… we like to take our time to analyse it, to establish deeper relationships,” he explained.
The company is also keen on diversifying its portfolio, balancing property and non-property business to ensure a holistic approach of portfolio management.
“We like to write property and non-property business because this is also giving us an opportunity to have global relationships with clients,” Nowakowski explained.
In more mature markets, the focus is on maintaining a balance between proportional and non-proportional business as while in markets like Australia and New Zealand, the vast majority is non-proportional business, in developing markets proportional business still plays a significant role.
“Placing proportional business is also implemented from the capital point of view and the reinsurers are providers of capital/capacity. Non-proportional business needs more capacity than proportional business in some markets,” Nowakowski said.
Peak Re is exploring structured solutions and alternative risk transfer mechanisms as complementary products for existing clients or a way to develop business with potential clients with a special team for structured solutions working very closely with colleagues from life and from P&C.
The reinsurer is also strengthening its actuarial pricing team to focus on specific type of risk e.g. cyber risks and is licensing cyber models for data accumulation.
“Cyber is very interesting, and we have already a portfolio covering mainly Europe and the US,” Nowakowski said, noting that discussions in some Asian markets are still limited but there is significant potential for growth.
Regulatory changes and significant growth in infrastructure, cyber and surety are the main factors that will shape the 1.4. 2025 renewal in India, Sudhir Salian, director and head of next-gen insurance solutions and head of India, tells InsuranceAsia News (IAN).
“The 2025 renewal season in India promises to be particularly interesting with several moving parts given the change in regulation, changes in the leadership in more than a few companies and that the property pricing in the direct market has dropped sharply,” Salian said, adding that “it will be really interesting to see how the reinsurance market responds”.
The Insurance Regulatory and Development Authority of India (IRDAI) has lifted restrictions on commercial terms in treaties, allowing reinsurers to reintroduce restrictive methodologies.
The market has largely shifted towards quota share structures, with fewer players using surplus arrangements, which will “definitely be a subject of discussion during renewals and risk selection”.
“The primary drivers for the insurance market [in India] are essentially property, engineering, and to a lesser extent, liability and agriculture,” Salian told IAN.
Property and engineering account for roughly 15% of the market, he noted, and large government health schemes also play a significant role.
“The primary drivers for the insurance market in India are essentially property, engineering, and to a lesser extent, liability and agriculture.”
Sudhir Salian, Peak Re
Infrastructure growth is generating increased premiums from various projects, driving demand for (re)insurance. This includes engineering treaties, project PI, design, and surety.
Another factor supporting surety is government encouragement for insurance companies to provide surety capacity to contractors.
“The government, particularly the Ministry of Transport, is encouraging insurance companies to provide surety capacity to contractors who bid for contracts,” Salian said.
“There are constraints on banks’ working capital limits for providing guarantees that contractors can avail, thereby creating significant demand for this product offered by insurers,” he explained.
The cyber insurance sector is experiencing significant growth, with demand outpacing supply. The market is expanding into large and medium enterprises, with reinsurers playing a crucial role in supporting these efforts.
Salian noted: “Customers that do a lot of international business are required to have a cyber policy in place, publicly listed companies require cyber cover.”
The Asia Pacific region, with its exposure to numerous natural perils, offers vast opportunities for employing third-party capital, including insurance-linked securities (ILS), says Iain Reynolds, director and head of catastrophe analytics and research at Peak Re.
Regulatory incentives in Hong Kong and Singapore are driving market growth, while diversification and reliable indices are key to structuring effective financial instruments.
“There’s a huge opportunity for employing third-party capital, including via ILS, for various insurance risks in the wider Asia Pacific region,” Reynolds told InsuranceAsia News (IAN).
The Asia Pacific region, exposed to numerous natural perils, presents vast potential for protecting physical assets.
Both third-party and traditional rated balance sheet capital play crucial roles in supporting the region’s economic stability.
Reynolds emphasises the importance of diversification in managing physical risks.
“The sheer scale of the region means that there’s plenty of diversification, which can be built as leverage for efficient third-party capital or ILS structures,” he said.
“Regulators in Hong Kong and Singapore have provided the incentives to trigger the market for issuers and we welcome those initiatives.”
Iain Reynolds, Peak Re
With numerous family offices and institutional assets available for investment, there is significant potential to match financial assets with the region’s physical risks.
“Regulators in Hong Kong and Singapore have provided the incentives to trigger the market for issuers and we welcome those initiatives,” says Reynolds. These incentives are also attracting investors, which is seen as a positive development.
Globally, the ILS or third-party capital market is valued at approximately US$100 billion, with cat bonds accounting for nearly half of this. However, less than 10% of this capital is dedicated to the Asia Pacific region, with the majority focused on Japan.
There is a need for reliable indices to structure cat bond transactions or third-party capital transactions. as these are crucial for ensuring that the financial instruments accurately reflect the risks they are designed to cover.
“If we wanted to do something in India or China, what we would like to see would be a reliable index that we could gain confidence in that would be a good proxy that we would be able to understand how well that index would track our own financial position,” Reynolds said.
Domestic carriers are seeking partners who can offer capacity, support growth, advanced analytics and broad-based expertise, said Rohit Boda.
The Indian reinsurance market has transformed significantly in recent years, evolving from GIC Re’s sole dominance before 2015 to a more competitive and sophisticated landscape with the increasing presence of foreign reinsurers (FRBs) and the growth of domestic insurance capacity, Rohit Boda told InsuranceAsia News (IAN).
“Insurers and reinsurers are adopting complex reinsurance structures, such as loss participation, sliding scale commissions, and event limits, commonly used in developed markets,” he said, adding that the insurance industry is gradually enhancing their risk retention capacity, as reflected in higher retentions on treaties and facultative business. This trend is driven by increased net worth and improved underwriting capabilities.
In terms of the use of foreign reinsurance capital, the industry has become less dependent on overseas reinsurers due to the growth of domestic reinsurance capacity, including GIC Re and FRBs. Besides, the prevalence of co-insurance arrangements among Indian insurers and regulatory support from the Insurance Regulatory and Development Authority of India (IRDAI) have further reduced the need for foreign reinsurance and instead maximised domestic retention.
Compared to prominent reinsurance hubs like Hong Kong and Singapore, which benefit from established infrastructure, a deep pool of reinsurance capital, and a favourable regulatory environment, India’s growing economy, large insurance market, and government initiatives position it to become a competitive player in the regional reinsurance landscape, said Boda.
Besides, initiatives such as the development of GIFT City as a reinsurance hub and the exploration of alternative risk transfer mechanisms will bolster the growth and position of the Indian reinsurance market as a preferred reinsurance market in Asia by attracting foreign reinsurers and fostering innovation, according to Boda.
P&C insurers in India are seeking reinsurance partners that can provide comprehensive support in several key areas.
“Capacity is a critical factor, especially given the increasing frequency and severity of nat cats and large infrastructure projects. Insurers need partners with the ability to cover high-risk exposures.
“Expertise in emerging risks like cyber liability, environmental hazards, and pandemic-related disruptions is essential. Reinsurers with specialised knowledge and experience in these areas can offer valuable insights and risk management strategies,” said Boda, adding that insurers in India also need partners who can support their expansion in both retail and commercial segments. ‘
This includes providing capacity for gross written premium (GWP) growth and risk management support to ensure sustainable growth.
“Capacity is a critical factor, especially given the increasing frequency and severity of nat cats and large infrastructure projects. Insurers need partners with the ability to cover high-risk exposures.”
Rohit Boda, J.B. Boda
“Insurers are looking for partners who can offer predictive analytics, actuarial tools, and automation support to improve their decision-making and efficiency.”
Additionally, reinsurers with experience across various lines of business, such as motor, health and agriculture, can provide a more comprehensive range of solutions for insurers.
Knowledge of regulatory compliance and local market understanding are crucial, Boda added.
“Reinsurers with a deep understanding of Indian regulations and a strong local presence can ensure smooth operations and provide tailored solutions,” he said,
Boda noted that there is still room for improvement, particularly in enhanced data analytics, risk modelling refinement and climate change focus.
“By continuously seeking to improve and innovate, brokers can play an even more critical role in supporting the success of the reinsurance industry.”
Given the escalating frequency and severity of nat events, particularly floods, P&C insurers in India are increasingly focusing on risk modelling and catastrophe risk management, Boda said.
“This involves leveraging advanced analytics to assess vulnerabilities, identify high-risk zones, and implement mitigation strategies. Additionally, insurers are seeking to diversify their portfolios through strategic partnerships and reinsurance arrangements to spread risk and mitigate potential losses.”
Additionally, the growing prevalence of cyber threats, fuelled by digitalisation, has necessitated a significant shift in underwriting practices, with insurers investing in cyber risk expertise to assess vulnerabilities, develop robust risk mitigation strategies, and secure adequate reinsurance protection.
“This includes leveraging advanced analytics and threat intelligence to identify potential cyber exposures and quantify risks,” said Boda.
Wenwen Chen, director at S&P Global discusses key factors influencing the profitability of APAC reinsurers, the impact of retrocession costs, and strategic approaches for diversification and risk optimisation amid rising weather-related losses and economic volatility.
What are the main factors affecting the profitability of reinsurers, besides retrocession costs? How can they overcome the burden of retrocession costs that cannot be passed to direct insurers – in terms of underwriting quality and risk selection?
For most APAC reinsurers’ domestic portfolio, proportional treaty constitutes the bulk of their book, the underwriting results are therefore closely associated with the performance of primary insurers. Reinsurers have been looking into tightening terms & conditions and adjusting sliding scale arrangements.
We also anticipate that reinsurers will take the initiative to be involved in helping stakeholders across the value chain to strengthen risk management from risk prevention perspective.
The increased retrocession costs, while likely narrowing reinsurers’ insurance margins, are a reminder for reinsurers to review the effectiveness and efficiency of their risk mitigation plan. Another point to note is APAC reinsurers’ profitability remains dependent on investment income.
What strategies can reinsurers use to diversify their books and reduce volatility in their underwriting? Do you see a shift to specialty and casualty and exit from aggregate covers?
We’ve seen examples in both geographic and business line diversification. As regional reinsurers maintain their home market advantage, they are also seeking diversification through growing into other markets. Meanwhile, reinsurers could be revisiting their peak zone exposure and consider balancing out their portfolio.
Yes, we do see a gradual shift to specialty and casualty, and believe market participants could be ramping up expertise in some business lines in these segments. The supply of aggregate covers remains limited.
How can reinsurers optimise their portfolio risk as they reassess their risk appetites to navigate the uncertainty amid higher weather-related losses and volatile economic conditions in the region?
From risk appetite perspective, reinsurers could be revisiting their appetite on natural catastrophe exposure following their review of loss experience.
On economic conditions and geopolitical tension, we anticipate reinsurers will conduct more customised stress scenario (in addition to what they’re required to perform) to support the refinement of their risk appetite.
Amidst all the chatter here at the 20th Singapore International Reinsurance Conference (SIRC) concerning how much ground reinsurers might (or might not) have to concede at the 1.1 renewals, or the continuing impact of global geopolitical uncertainty (I write this as the polls close in many US States!), one topic that has certainly caught my attention has been that of generative AI.
The subject featured heavily in the panel discussion, ‘Mastering a Sustainable Future in Turbulent Times: A View from the Top’. In an excellent session moderated by Clemens Philippi, CEO of MSIG Asia (Singapore), the impact of generative AI on the future of the (re)insurance featured prominently, and I was struck by just how seriously the market is already taking a technology that now seems beyond any doubt to have a profoundly transformative impact on all our lives.
On the panel at the discussion, Dawn Miller, Chief Commercial Officer at Lloyd’s and CEO of Lloyd’s Americas, conceded that this is a “huge topic” and said that as an industry it is approached with “a lot of humility”.
On the positive side, Miller said that already generative AI is making its presence felt in the market as some modelling for natural catastrophes is now AI-driven, while she added that Lloyd’s itself has some two dozen AI concepts ongoing at the moment. Now that’s what I call commitment!
What struck me is how transformative the market thinks AI will be. To quote Miller again: “It’s a bit of a journey, and one that will have some negative dips” but one that we can’t ignore. As she added: “We were all sceptical about the iPhone when it came out, but now we can’t live without it.” Indeed.
Interestingly, fellow panellist Matthew Carletti, managing director of Citizens JMP, was at pains to point out that AI will NOT replace the art of underwriting, though he suggested that AI will have more of an impact in the claims arena. We shall see.
Oh yes, one final point as I sign off here from what has been another wonderful, well-attended SIRC. Please bring back the Media Room – us journos are as much a part of the market as the rest of you, and work hard to bring you informative and intelligent comment on the key themes of the conference. We need some space to do this, please!
