Fitch: APAC Steps Up Efforts to Boost Catastrophe Management
Fitch says in a special report that the high catastrophe exposure and significant gap between insured losses and economic losses mean that the region is in need of proper (re)insurance protection for its catastrophe losses. Another trend of catastrophe funds/pools has also emerged in certain Asian markets. Such initiatives are typically led by the governments or industry associations in the specific market. Thus far, Thailand and China have started the process of implementing such initiatives as part of their national disaster-management schemes, which would help the local (re)insurers manage their catastrophe losses.
This year has so far been relatively free of major catastrophes, except for a recent explosion at a chemical warehouse in Tianjin, China on 12 August 2015. The Chinese insurance regulator has not yet released official statistics on the amount of claims incurred from this event, but the insured losses are likely to be substantial, potentially exceeding USD1bn-1.5bn, according to industry estimates. Fitch expects the number of reported insurance claims cases to surge in the coming weeks.
Fitch expects the operating landscape of Asian reinsurance to be shaped by a combination of three factors - new operations established by foreign reinsurers in Asia; start-ups by Asian insurers themselves; and ongoing M&A activities in specific Asian reinsurance markets. This will raise the level of competition, and allow a transfer of technical expertise and knowledge from the foreign entrants.