Total Asia Pacific catastrophe limit purchased in 2013 increased for the tenth year in a row, but once again failed to keep pace with strong gross domestic product growth in the region, according to a new report released today by Guy Carpenter.
With excess capacity returning to the market in 2013, reinsurance buyers in the Asia Pacific region were able to secure greater value at renewal, although with recent losses etched into the collective memory of the market their ability to achieve significant price reductions was limited. Total catastrophe excess of limit in the region continued to grow. In the Asia Pacific Catastrophe Report 2013, Guy Carpenter discusses some of the key drivers that have fueled this growth in limit over the past ten years, notably an increasing focus on risk-based capital standards, growing awareness of non-modeled perils and rising insurance penetration in our emerging economies.
Despite this strong record of catastrophe limit growth over the past ten years, the fact is that it has failed to keep pace with growth in the rapidly expanding economies of the Asia Pacific region over the same period. In many markets the purchase of insurance is still not a priority. In others the actual product on offer does not satisfy the demand. With dedicated traditional reinsurance sector capital for Asia Pacific at a record high and with alternative capital seeking peak zone catastrophe opportunities in the region, Guy Carpenter predicts that the conditions are ripe for a broader reinsurance community to respond positively to this growth opportunity with innovative and customised solutions.
The report’s executive summary is available here. The full report reviews the catastrophe exposure and reinsurance market conditions of major countries in the Asia Pacific region, helping set the stage for the 2014 renewals.
James Nash, CEO of Asia Pacific Region, Guy Carpenter & Company, said, “As evidenced by Guy Carpenter’s Asia Pacific Limit and Rate On Line Index, our region has demonstrated strong, solid growth in catastrophe reinsurance over the past ten years. Growth in total catastrophe limit purchased, however, has failed to keep pace with the stellar economic performance of the Asia Pacific region. We remain committed, therefore, to helping our clients achieve profitable and sustainable growth with customized products and solutions that stimulate (re)insurance buying.”