How to drive results in Asia-Pacific

In today’s complex landscape, client growth strategies are constantly being tested by emerging challenges—from economic shifts to rapidly evolving risks.

Seven Asia-Pacific segment leaders from Aon’s Reinsurance Solutions shared their insights with SIRC Today on the key challenges facing their clients and the innovative strategies they’re each employing to encourage profitable growth, offering a comprehensive look at how re/insurance experts are tackling today’s hurdles, while positioning their clients for tomorrow’s successes.

Soeren Soltysiak, property growth leader Asia-Pacific

Increased retentions on reinsurance programmes and higher protection costs continue to put pressure on underlying insurance results and capital requirements.

Many reinsurers still avoid higher frequency areas in risk and catastrophe programmes and less-modelled perils. Using Aon’s proprietary catastrophe models, we work closely with our clients to create a unique view of risk that truly reflects their portfolio, enhancing reinsurers’ understanding of the underlying exposures.

After several profitable quarters, reinsurers are again looking for growth. Despite recent events, the reinsurance market will likely deliver above-average returns for 2024, putting pressure on rates heading into the renewals.

Our cedants saw significant changes to their reinsurance programmes over the past two years and expect positive developments in rates and general terms and conditions.

Given the oversupply in available capacity, reinsurers that can support only single programmes, or worse, prefer to write only certain parts of placements, will see their signings come under immense pressure.

We advocate a broader partnership approach that will benefit insurers and reinsurers in the long run.

As clients across the Asia-Pacific region are looking for profitable growth, portfolio segmentation and a clear understanding of loss drivers are key to delivering differentiated results.

Our analytics colleagues support through detailed insights and innovative solutions that broaden the product base, ensuring the most effective capital deployment for superior returns, and helping to shape better business decisions.

Ai Ping Chan, marine and energy leader Asia-Pacific

In today’s complex and interconnected world, marine insurers face some key challenges.

“Aon is well-positioned to provide marine technical advice, pricing review and structure analysis.” Ai Ping Chan

First, the increasing geopolitical tension around different regions of the world impacts marine activities more acutely due to the global nature of marine and energy business.

In addition, there is increased frequency and potential for larger claims due to factors such as climate change, accumulation of higher sums insured, and more sophisticated and larger vessels. Hence we continue to work with our clients to evaluate the adequacy of their reinsurance cover, and how the cover will respond to various large events.

The push for and growth of renewable energy add to the need for larger capacities and specialised advice.

In this fast-moving world, marine insurers need to stay competitive while adapting to market trends and developments.

Aon is well-positioned to provide marine technical advice, pricing review and structure analysis, allowing our clients to make better decisions for marine reinsurance solutions.

With a united and collaborative approach across our marine, energy and renewables teams in various functions, along with Aon’s strong network offices globally, we aim to provide a holistic approach to equip our marine clients with the best marine reinsurance tools to meet their challenges and growth ambitions.

Pierre Vende, life and health leader Asia-Pacific

Life and health insurers in the Asia-Pacific region continue to face multiple challenges in their pursuit of profitable growth. In the health insurance segment, across the entire region, group and individual portfolios of medical reimbursement products see their performance remain degraded by continued double-digit medical inflation.

Insurers are forced to play catch-up, seeking to implement countermeasures such as rate increase, deductibles, and co-pays, in a very competitive environment, where being a first-mover may also have negative consequences.

“This is a significant opportunity for insurers to differentiate themselves from their peers.” Pierre Vende

While not solving all the systemic issues, insurers establishing reinsurance collaborations do benefit from a protection against further deterioration, as well as additional views on portfolio performance management and inclusion of new profitable benefits.

On the life side, continuous adaptation to the evolving reporting standards, accounting rules and capital framework will be certainly among the top challenges of the insurance and reinsurance market in the years to come.

This is a significant opportunity for insurers to differentiate themselves from their peers through a superior risk management and balance sheet optimisation strategy.

Reinsurance remains a very valuable tool to achieve this, and our life and health team at Aon keeps strengthening in the space, as we help clients implement new effective solutions in areas such as lapse risk management or investment risk transfer.

Grant Hollyman, casualty leader Asia-Pacific

Casualty business in the region has, in the main, been a profitable and efficient use of capital for reinsurers for several years. This is expected to continue in 2025.

“Loss-affected treaties should expect rate increases in 2025.” Grant Hollyman

In certain regions, insurers and reinsurers are seeking to reduce their US exposures.

There is sufficient capital available to support casualty books in the region, which will drive price tension in upcoming renewals, and reinsurers are increasingly seeking an analytics-led approach to showcasing insurers’ primary exposure as the market becomes increasingly sophisticated.

For the 2025 renewals, Aon expects a flat to slightly downward pricing on a risk-adjusted basis. Loss-affected treaties should expect rate increases in 2025.

The key measure to success for casualty insurers is the clear articulation of exposures and original rate increases, coupled with underwriting discipline on rate adequacy and a measured, long-term approach from reinsurers. These factors have led to sensible outcomes through recent renewals, and we expect a similar trend in 2025.

Geoffrey Lambrou, facultative leader Asia-Pacific

We see increasing volatility as the new norm. Strong results for reinsurers can be confused with significant events that only a few years ago would have caused reinsurance capital depletion.

Now, these size losses are earnings impacts and there is potential for even bigger events to take place.

Within this evolving risk environment, facultative reinsurance can deliver more cost- and process-efficient methods than ever before.

“We are delivering more proprietary facilities to help our clients.” Geoffrey Lambrou

Fast-growth industries, coupled with corporate and governmental needs around environmental, social and corporate governance (ESG) issues and the journey forward in artificial intelligence, create many opportunities on which insurers can focus and for brokers to display positive differentiation.

A general change in facultative market conditions is that we see growing supply of capacity against demand, giving clients a better outcome than in prior harder market conditions.

In Aon’s Asia-Pacific facultative team, we are delivering more proprietary facilities to help our clients, and continue to deliver more innovation backed by talent and global tools.

We remain in an amazing part of the world where facultative continues to thrive, with Aon investing for the sustainable future.

Wen Chen, agriculture leader Asia-Pacific

Asia-Pacific agriculture continues to see a consistent and increased capacity from the market.

“Proportional capacity remains a challenge for specialty products.” Wen Chen

Firms that openly and precisely communicate their risk management approach will be better positioned to secure greater reinsurance support for their upcoming policy renewals.

However, certain challenges remain and may affect a client’s ability to achieve profitable growth.

Proportional capacity remains a challenge for specialty products such as aquaculture and livestock, and early engagement with markets and transparency around exposures is key to success.

We can assist our agriculture reinsurance clients to design optimal reinsurance structures supported by a strategic market execution, to ensure the best outcomes for our clients and partners.

Crop insurance can be influenced by government policies and subsidies, which can change frequently and vary by region. Strategic planning by Aon around regulatory shifts helps clients to maintain profitability and avoid potential risks.

Tom Drake, retrocession leader Asia-Pacific

In 2024 there was a return to syndication across placements due to increased capacity, mainly from existing key retrocession markets, leading to significantly reduced execution risk.

“Optimising clients’ retentions will be key to helping them maximise profitability.” Tom Drake

While there was a certain degree of softening in terms and conditions, such as broader territorial scope, first-loss attachment levels remained generally unchanged at a consistent return period.

From a demand point of view there was some reduction in purchase from certain clients due to portfolio adjustments, while others continued to see growth in their underlying portfolios leading to increased vertical limit purchase.

We also witnessed increased interest in exploring parallel strategies across proportional and indexed solutions.

For 2025, optimising clients’ retentions will be key to helping them maximise profitability from both earnings and capital perspectives.

This will include introducing tailor-made frequency products and the use of split deductibles in order to achieve greater efficiency.

Soeren Soltysiak is property growth leader Asia-Pacific, Aon’s Reinsurance Solutions. He can be contacted at: soeren.soltysiak@aon.com

Ai Ping Chan is marine and energy leader Asia-Pacific, Aon’s Reinsurance Solutions. She can be contacted at: ai.ping.chan@aon.com

Pierre Vende is life and health leader Asia-Pacific, Aon’s Reinsurance Solutions. He can be contacted at: pierre.vende@aon.com

Grant Hollyman is casualty leader Asia-Pacific, Aon’s Reinsurance Solutions. He can be contacted at: grant.hollyman@aon.com

Geoffrey Lambrou is facultative leader Asia-Pacific, Aon’s Reinsurance Solutions. He can be contacted at: geoffrey.lambrou@aon.com

Wen Chen is agriculture leader Asia-Pacific, Aon’s Reinsurance Solutions. She can be contacted at: wen.chen1@aon.com

Tom Drake is retrocession leader Asia-Pacific, Aon’s Reinsurance Solutions. He can be contacted at: tom.drake@aon.com

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