SIRC 2026: Softening opens door for parametrics, blended programs

November 3 2026 by

A softer market could make it easier for buyers to construct blended programs, using traditional insurance where it works well and parametric solutions where it does not, according to Ben Qin, head of Asia Pacific at Descartes Underwriting. 

“The APAC reinsurance market is becoming cheaper and more plentiful, but buyers aren’t necessarily using that opportunity to reduce their own risk retention,” he said. 

For the upcoming 1.1 renewal, the Paris-based parametric specialist MGA expects more reinsurance capacity to be available, with more reinsurers willing to write APAC risks and existing reinsurers potentially deploying more capital.  

It also expects prices to fall by more than 10% in most cases, on a risk-adjusted basis. 

“Once changes in the underlying risk are taken into account, including exposure growth, inflation, catastrophe modelling and loss experience, we expect pricing to fall by more than 10% in most cases,” Qin said.  

“This should give cedents greater choice and negotiating leverage when structuring their programs.” 

Qin said that Descartes expects retention for reinsurance programs to remain high, which could support “positive take-up of parametric products as a gap-filler for APAC reinsurance buyers”.

“We don’t expect the reinsurers to reduce retentions, or at least not at the cost economics enjoyed by cedents during the previous soft market cycle.”  Ben Qin, Descartes Underwriting

Even with plenty of traditional reinsurance capacity and lower rates, gaps in protection will remain, and parametric insurance can sit alongside traditional cover to address the gaps. 

“We don’t expect the reinsurers to reduce retentions, or at least not at the cost economics enjoyed by cedents during the previous soft market cycle,” Qin added.  

“This is consistent with global markets, and also in the Asia region, against the backdrop of retained losses from frequency events (e.g. several typhoons and floods in Japan, China, Philippines particularly this year to date alone, on top of the earthquake activities in Indonesia, Japan, Myanmar/Thailand and Philippines last couple of years).” 

Pushing the boundaries

Demand for parametric insurance is also expanding well beyond traditional sectors such as energy, agriculture and retail, into areas including hospitality, infrastructure, manufacturing, logistics and microfinance.  

“One key trend in the Southeast Asia region is cedents are also keen to offer parametric insurance in their local markets especially in the microinsurance/agriculture space. Additionally, public-private partnerships are expanding faster to adopt parametric covers across the region,” Qin added. 

However, natural catastrophe-linked solutions remain at the heart of parametric insurance in APAC, particularly for typhoons, floods and earthquakes in markets such as Australia, China, Japan and the Philippines. 

“In APAC, our focus remains on areas where traditional insurers and reinsurers have limited risk appetite, particularly in the nat cat space. As a company, Descartes is also continuing to evolve its product suite in the region, including power outages, aggregate flood reinsurance covers and data centre-related coverages,” according to Qin. 

Give it a shot 

With products broadening and market conditions improving, Qin urged buyers to test what parametric capacity could add to their programs. 

“We strongly encourage cedents in APAC to explore the feasibility of alternative products and sources of capacity, including parametric,” Qin said.  

Evolving technology and data sources have helped overcome many of the earlier challenges associated with adopting parametric insurance, he noted. 

Historically, one of the biggest challenges was having reliable, sufficiently granular and trusted data to define the trigger.  

Technology has significantly improved the availability and quality of data, including through satellite imagery, remote sensing, weather stations, sensors and other data sources. 

As a result, some of the concerns that may previously have deterred cedents from considering parametric, particularly around data quality, availability and reliability, are becoming less relevant. 

“Rather than simply renewing an existing reinsurance program in the same form each year, cedents should consider whether alternative structures could improve their protection,” he said.  

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