Fitch: Asian Regulatory Reforms to Increase Appetite for Reinsurance
Legislative changes in Indonesia, Vietnam and India are trending towards more protectionism, with attempts to increase the percentage of insurance business to be placed with domestic reinsurers. Local reinsurers are being constantly challenged in their ability to improve their risk-management sophistication and controls, to keep up with the upcoming surge in premium volume. Fitch also expects market competition to intensify with several new local reinsurers being set up in China in 2015-2016.
The gap between insured losses and total economic losses arising from natural catastrophes improved in 2015, but Fitch believes it is still far too wide. Many Asian markets have low insurance penetration, which Fitch believes will provide solid business growth potential - including the relatively untapped Indonesian, Chinese and Indian markets. The total insured losses in Asia improved to 19% of the region's total economic losses in 2015 from 10% in 2014.