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SPEAKER 1: Welcome to WTW's Global Marketplace Insights series, where our experts bring you the latest risk and insurance perspectives.
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BEN DUNSTON: Hello, my name is Ben Dunston. I'm the placement head for Asia. Welcome to the second half state of the market report for Asia. As we enter the last quarter of 2024, it's important to look back on how the year started with 2023, seeing the insurance market facing an unprecedented fourth consecutive year of natural catastrophe, global losses in excess of $100 billion, with Verisk estimating the new normal at over $150 billion globally with Asia exposure being one of the fastest-growing elements of this number.
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2024, however, has been described as the year of elections from around the world, and Asia was a part of that, with both Taiwan and India completing elections and a cautionary eye forward to how changes in the US might impact some of Asia's high-tech industries and the insurance market implications of changes to commercial approach and investments in the region.
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You'll hear from my colleagues, in specialty, about the capacity, coverage, and pricing particular to their markets and their lines of business. So we encourage you to access those reports on the website. We usually begin by reminding clients and viewers that Asia is extremely diverse as a region in terms of regulatory approach, cultural values, and insurance market conditions. Singapore and Hong Kong have large wholesale markets and provide support for other regional risks, much aligned to international markets such as London or Bermuda.
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We've seen an uptick in insurance enquiries for industrial priorities specific to the domestic market, such as renewable energy in Southeast Asia, agriculture and health care in India, semiconductor manufacturing in Taiwan and China, and, of late, an increase in logistics and data centers setting up in Singapore, Malaysia, and the Philippines.
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Looking at the Philippines specifically, there have been significant rate corrections in the domestic Philippine markets after flat conditions for many cycles. Natural Catastrophe (Nat Cat) pricing on property continues to be pressured with low capacity in the domestic market, resulting in international market pricing pressures on domestic programs.
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There have been notable investments in renewable energy with major energy firms expanding international footprint throughout South Asia, but also buying out and building assets in Australia and the USA. The aim is twofold, as they look to close the gap for domestic power generation, and secondly, transition away from thermal.
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Headlining this expansion is the construction of a largest solar farm in the world at 4 gigawatts. This presents insurers in the Philippines and internationally with the challenge of formulating an effective renewable insurance appetite to support the region.
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Countries in the Association of Southeast Asian Nations (ASEAN) region are looking to take advantage of the reshoring of manufacturing from China, with ASEAN semiconductor exports reaching $165 billion in 2022, a huge increase compared to $52 billion in 2017, according to Dezan Shira Associates. A major beneficiary has been Malaysia, which has seen an influx of high-tech investment and benefits from a China Plus One strategy and very substantial levels of inward investment from major multinationals semiconductor manufacturers and logistics providers.
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This presents the insurance industry with opportunities to grow their GDP base in a strategic industry. And whilst premium may flow back to US, Japanese, or Korean global programs, there is significant opportunities from a heightened economic activity across construction, marine property, and casualty programs to the benefit of the wider Asian region.
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And we are operating, it's very clear, in an increasingly dynamic market environment. And globally, the general trend across the insurance market has been one of increased appetite from insurers and reinsurers. Many insurers set growth plans mid-2023, and many needing to grow premium bases in excess of 20%. Market softening, in major lines in 2024, has left them short.
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And as Q4 approaches, they're chasing premium income aggressively, resulting in some volatility of pricing across property, Financial Professional and Executive Risks (FINEX) casualty, natural resources, and marine. Softening is not just about premium rate. There are other signs of softening, which include multi-year deals, increased sub-limits, lower deductibles, and requests from insurers to increase line sizes.
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Now, we understand that different dynamics operate in different markets and geographies and across different lines of business, but nevertheless, we are seeing increased competition in the insurance market that serves Asia both here and in London and at times, this has been ahead of expectation.
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WTW will be at the forefront of pushing for the most competitive pricing for our clients and will access the market where the most competitive deal can be done. As ever, thank you for your time and attention. I look forward to updating you all in 2025.
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Thank you very much.
