Southeast Asian reinsurers look to life, health for growth - AM Best report

KUALA LUMPUR, Oct 20 -- Although many reinsurers operating in Southeast Asia recorded underwriting losses last year from perennial challenges, the region still offers significant growth potential given the hardening market conditions and greater demand for health coverage amid the pandemic.

The new Best’s Market Segment Report, ‘Southeast Asian Reinsurers Look to Life and Health for Growth’ states that many domestic reinsurers in Southeast Asia posted solid premium growth last year, although these increases generally did not translate to favourable underwriting results.

However, there are signs the reinsurance market in the region may improve, according to a statement from a global credit rating agency, AM Best.

The exit of several reinsurance underwriters from the region and tightened underwriting practices of global reinsurers amid the COVID-19 pandemic have reduced capacity and increased rates.

At the same time, the ongoing pandemic has accelerated the growth trend in the life and health insurance segment, as demand for coverage has risen, with consumers having become increasingly aware of the benefits.

Given that the penetration of health insurance remains very low, AM Best expects the growth in this segment to continue to outpace other classes of business in the region.

While the rapid expansion of the health line of business will lead to heightened underwriting risks, AM Best expects the balance sheet strength of the domestic reinsurers to remain solid.

The life and health business typically has no exposure to catastrophic risk and tends to be more stable than the traditional property/casualty businesses, and therefore is subject to lower capital requirements as compared with the commercial business lines.

More details at www.ambest.com.

-- BERNAMA