Fitch Ratings believes climate volatility, which has exacerbated the intensity and severity of natural disasters, remains an area of focus for Asian reinsurers.
The protection gap signals vast potential for reinsurance growth, but Asian reinsurers face challenges in enhancing their risk mitigation capability and managing premium pricing adjustments in light of the frequent catastrophe losses.
The Covid-19 pandemic has dampened Asia’s economic growth and development, but it has also raised the importance and demand for reinsurance.
Many policyholders are feeling the heat of being underinsured and seeking better risk coverage and protection.This includes the rising threat of ransomware during the pandemic, which led to greater awareness and need for cyber risk protection.
Fitch thinks reinsurers will face challenges in exercising proper risk management and control in underwriting these new business opportunities amid the potential for economic volatility.
“We think Asian reinsurers’ capital remains commensurate with their business profiles, based on the available statistics for selected reinsurers. The quality of shareholders’ equity is sound, with little or no debt for most of the Asian reinsurers.The reinsurers’ key capital management is centred on the reduction of non-essential expenses and setting aside appropriate capital buffers to back up business growth amid economic uncertainty,'' said Fitch..