Asia-Pacific: how to pick the top insurance growth markets

The Asia-Pacific region accounts for 37 percent of global gross domestic product and is a region witnessing rapid insurance market growth. However, the vastness of the region, its diverse population and the fast pace of change make it challenging to decide where to focus efforts for the best possible returns.

Senior leaders from businesses in the region shared their strategies for selecting the right markets to expand into in an Intelligent Insurer panel discussion. Panellists included Christian Stobbs (pictured right), managing director–Asia, Markel International Singapore; Lucien Mounier (pictured left), head of Asia-Pacific, Beazley; and Lee Ellis (pictured center), chief strategy officer, Ramon International Insurance Brokers.

Asia-Pacific offers a wealth of opportunities for growing re/insurance companies. In India, insurance premiums are projected to grow by 9 percent annually over the next decade, while China’s insurance market is forecast to increase by 7.2 percent a year between 2021 and 2026; insurance in Singapore grew by 15 percent in 2022.

The panellists agreed key areas to look at when picking your growth market were regulatory changes, geographies and business lines where your business has existing growth, and the skills and competencies of your own teams.

As an established player in the region, Markel operates in six offices across Asia-Pacific: Mumbai in India; Dubai, Hong Kong and Shanghai in China; Labuan in Malaysia and Singapore. It works across six classes of specialty business: marine, energy, trade, credit, financial lines and terrorism.

At a basic level, this gives Stobbs and his team a range of products and territories that they use to analyse the Asia-Pacific portfolio for performance and make sure it is optimised.

“The most simplistic thing is to look at where we are generating good returns. You want to double down on what we call the green areas, and be a bit more cautious and hold back where returns are less good and moving into what I’d call a red area,” Stobbs said.

Beazley’s Asia-Pacific business operates a hub model out of Singapore, offering nearly the full suite of its specialist products, including cyber, financial lines, marine, jewellery and fine art, and political classes of business.

Mounier said that when it comes to market expansion, providing value is a key focus for the firm. “If we feel a market is not yet ready for a specific solution that we would like to develop, we’re happy to wait. So we’re not actively trying to go into a new market and capture market share in a space that we might not be experts in. We very much focus on the things we know we’re good at and where we can add that value.”

Market knowledge

For Stobbs, having feet on the ground in-country enriches the assessment of any growth ambitions because you’re “close to the action”.

Markel’s investment in India in the last few years has been down to greater retention of reinsurance business locally, which has been driven by the Insurance Regulatory and Development Authority of India (IRDAI). It’s a trend the company has been able to monitor closely and respond to thanks in part to its office in Mumbai.

“We are an onshore reinsurer there able to provide that capacity locally to have a capital advantage from placing business onshore rather than offshore,” Stobbs said.

For Ellis, regulatory frameworks drive his growth market selection. The international company has recently launched in Korea and is looking to expand further into Asia-Pacific.

Ellis said that the broker looks for potential “where good governance is in place, where we can feel comfortable and that we’re not exposing ourselves to unnecessary risks”.

When scoping out markets, he assesses the alignment of Ramon’s competencies and resources with the prospective market, as well as how the business will fit within the market structure and how competitive the broker could be.

“We identify mature markets versus emerging markets. We look at factors such as insurance penetration into those markets,” Ellis said.

“We look at market performance. Ultimately there has to be an appetite and desire from underwriters to write the business from the markets in which we trade. We also look at how easy it is to transact business within those markets.”

Strength in diversity

The importance of relationship-building for growth was emphasised by Mounier, who said that having a diverse team can be a boon.
“Growing a business in this region is often contingent on building relationships.

“In the short term, a lot of the way that we prioritise our growth choices is very much connected to the team’s skills and existing relationships. In the longer term, you can build a team that gives you better access to a certain country or product.

“We’ve tried to focus on building a very diverse team in Singapore that has the knowledge of territories and products across the region.”

Last but not least is the importance of macro level “touch and feel”, according to Stobbs. For example, observations while he was in China recently and what he saw in Dubai on another recent visit have helped him develop a richer picture of regional growth prospects.

“It’s essential to visit and talk to brokers and market participants. You get a real insight and that is a great way of informing where you place your chips,” he concluded.

For more on how to pick and prioritise insurance growth markets in Asia-Pacific, watch the full discussion video above.

You can also read the sister article titled  Local intel: maximising insurance growth in Asia-Pacific