Asia Pacific sees rapid insurance market liberalisation: Aon

Asia Pacific re/insurance markets are seeing accelerated liberalisation and cross-jurisdiction collaboration develop further as rating agencies and regulators evolve to keep up with the rapid pace of change in the region, according to research from Aon.

The company’s report Evolving Criteria: Asia Pacific summarises the key global rating agency criteria developments and regulatory changes in the past 12 months.

It found that constraints on foreign insurers or foreign investment in insurance were abolished or relaxed in China, India and Myanmar, among other countries. While cross-jurisdiction cooperation was enhanced inside Greater China and among ASEAN countries.

The report also confirmed that the trend of enhancing solvency requirements continues across APAC with initiatives in several major markets making substantial progress. These include China’s C-ROSS Phase II, Hong Kong’s RBC, India’s RBC, Singapore’s RBC 2 and Korea’s K-ICS.

It also showed that the implementation dates for IFRS17 vary among Asia Pacific markets. While regulators for the Philippines and Taiwan announced an implementation date that was “behind global schedule, with insurers in several other markets demanding similar”, Aon said.

Rating agencies have also been “fine-tuning” their methodology to better evaluate insurers’ credit profile. S&P simplified and consolidated its previous criteria. AM Best proposed to formally include innovation in its rating analysis.

In Aon’s recently released Aon’s 14th Insurance Risk Study, the updated annual Country
Opportunity Index from Aon Reinsurance Solutions revealed that APAC markets “dominate the top positions”.

Aon said that for the fourth year in a row, Malaysia, Indonesia, and Singapore are ranked within the top five positions in this index. All three have shown low combined ratios, healthy premium and GDP growth, and a stable political environment.

High premium growth is expected in APAC due to current low insurance penetration, government policy push on investment in infrastructure, and market liberalisation.

The index shows markets with a desirable mix of profitability, growth potential, and a relatively stable political environment.

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