Non-life premium growth across the region slowed to 5.1% from 7% in 2024, its lowest level since 2021, reflecting softer pricing in mature markets and portfolio rationalisation.
Singapore: Asia-Pacific’s insurance industry continues to offer substantial growth opportunities, but slower premium expansion, changing catastrophe patterns and emerging technology risks are reshaping insurers’ strategies, according to Gallagher Re’s APAC Market Watch 2026.
The reinsurance broker’s fourth annual report analyses 14 mature and emerging markets across the region. It finds that economic growth remains strong, while insurance penetration is low in many markets, leaving significant scope for insurers to expand coverage.
The 14 markets recorded average GDP growth of 4.4% in 2025, compared with global growth of 2.9%. Emerging Asian economies grew by 5.3%.
However, non-life premium growth across the region slowed to 5.1% from 7% in 2024, its lowest level since 2021, reflecting softer pricing in mature markets and portfolio rationalisation.
An uncertain macro and geopolitical environment
Economic growth across APAC strengthened in 2025, with mature and emerging markets both expanding faster than the previous year. However, stronger economic growth did not translate into higher non-life premium growth. Ongoing geopolitical tensions, energy market volatility and global trade uncertainty continue to create headwinds, making agility, disciplined growth and capital management increasingly important.
Protection gap highlights growth potential
The report identifies low insurance penetration as a major structural opportunity. Non-life insurance penetration averages just 1.1% in emerging Asia, against 2.3% in mature Asian markets.
India, Vietnam and the Philippines each have penetration below 1%, despite their growth potential.
Infrastructure development, renewable energy investment, electric vehicle adoption and digitalisation are expected to create demand for property, construction, engineering, liability, cyber and other specialist covers.
Underwriting performance has also improved. The region’s average combined ratio declined to 98.1% in 2025 from 99.4% a year earlier. Emerging Asia improved from 101% to 99%, while mature markets recorded a combined ratio of 97%. Stronger profitability and capital positions are encouraging insurers to seek growth beyond their domestic markets.
AI creates new risks and insurance opportunities
Artificial intelligence is moving rapidly from experimentation into real-world business adoption across the region. AI is emerging as both a source of insurance demand and a challenge for risk assessment. Investments in data centres, semiconductors, digital networks and advanced manufacturing are creating opportunities across property, engineering, cyber and specialty insurance.
At the same time, AI-related errors, privacy breaches, intellectual property disputes and automated decision-making could generate exposures across cyber, professional indemnity and product liability. Gallagher Re cautions that these risks are evolving faster than many existing policy wordings, pricing models and accumulation controls can accommodate.
Demand is growing for new insurance solutions covering AI-related liabilities, while investment in data centers, semiconductors and supporting infrastructure is creating additional opportunities for insurers. As the technology evolves, insurers must adapt underwriting approaches, policy wordings and risk management frameworks to keep pace with changing exposures.
El Niño could reshape catastrophe exposures
The report also warns that a potentially exceptionally strong El Niño could alter the frequency, timing and severity of natural catastrophes across the region. Reduced rainfall may ease some flood exposures but increase drought, extreme heat and wildfire risks, while changing cyclone patterns could create fresh challenges.
Gallagher Re stresses that lower average rainfall should not be interpreted as lower catastrophe risk, as severe, localised events can still generate substantial insured losses.
Insurers internationalize in search of profitable growth
Improved profitability and stronger capital positions are encouraging insurers to look beyond domestic markets for new growth opportunities. This is putting pressure on management teams to find alternative growth opportunities. Although this may lead to consolidation in some markets, insurers are increasingly looking abroad for growth.
Softer reinsurance market favours buyers
Ample reinsurance capacity, strong reinsurer earnings and inflows of alternative capital are creating favourable conditions for insurers heading into the 2027 renewal season. Softer pricing and greater flexibility give buyers scope to restructure programmes, review retentions, strengthen protection and improve capital efficiency.
However, Gallagher Re warns that a major catastrophe, renewed inflation or disruption in capital markets could change pricing and capacity conditions.
Roshan Perera, CEO, Asia Pacific at Gallagher Re, said the region’s long-term prospects are supported by economic growth, low insurance penetration and investment in infrastructure, technology and the energy transition. Insurers that combine innovation with underwriting discipline will be best positioned to capture these opportunities.