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Japan
Korea
The economy showed signs of continuous growth and potential
to extend into 2015. Despite the eects of the heavy snowfall in
February 2014, insurance companies fared favorably. Automobile loss
ratios, though high, had improved due to a decline in accidents.
Previous mega-mergers have resulted in an 87% market share being
held by the top three domestic insurers. Foreign-owned insurers
vying for the remaining share faced multiple barriers. Insurers leveraging
on international experience and group reinsurance capacity through
specialised niche products achieved growth. International expansion of
Japanese multinational corporations also provided the potential to create
demand for global programmes, for which foreign companies are more
suited. Broker numbers have shrunk, as large corporations continued to
be serviced by in-house agencies. Nonetheless, the increasing interest
in broker-style services led to new business, not just from parallel
agencies, but in-house agents who sought to improve their own risk
management services.
The Korean economy is expected to grow 3.5% this year and 3.9%
in 2016. Economic data shows the country’s manufacturing sector
is contracting, while consumer confidence remains tepid. The non-life
insurance market is expected to post a slower recovery in 2015 with
the growth rate estimated at 4.8%, up 0.5% from last year. Demand
for general property and casualty insurance is likely to post a limited
growth, due to the economic slowdown, whilst marine insurance
premiums have reduced by 10%, resulting from a slowdown of the
industry, particularly the shipbuilding segment.
The premium rate across SME’s remained stable, with notable
rate reductions in large energy risks and construction businesses.
This was largely due to oversupplied reinsurance capacity. Market
penetration of insurance brokers still remains at approximately 7%
of total SME’s, due to strong direct sales channels of non-life insurers.
Outlook for 2015
2015 will see export credit insurance opening to non-life
insurers, whilst domestic credit insurance will remain
under a monopoly by SGIC. We will see reps & warranty
slowly grow and improve M&A success ratios. With
the exception of motor insurance, the Korean market
is expected to grow by between 1-3% in 2015.
Outlook for 2015
In view of potential increases in insured losses from
weather-related disasters due to global warming, Japanese
non-life insurers are planning to start raising premium rates
on fire/wind/flood risks from the financial year starting
1 April 2015. Product recall insurance may attract a great
deal of attention from global manufacturing corporations,
due to significant exposures to the public surrounding an
auto-parts manufacturing corporation’s global recall.
Malaysia
The market remained strong, following a premium growth in
the non-life sector, that resulted from an improving domestic
economy and increased auto-sales. The general insurance industry
was up 6.4% year-on-year in 2013, and 6% projected for 2014.
The property & casualty market remained highly competitive, as
insurers prepared for detarication in 2016. Attention was also
given to the Implementation of Goods & Services Tax due to
commence in April 2015. More M&A activities were observed, as
predicted. With the recent implementation of the Financial Services
Act 2013 and the Islamic Financial Services Act 2013, reinsurance
entrants grew, resulting in greater capacity in the market.
Outlook for 2015
Competition is expected in the construction market ahead
of new expressway projects worth over RM75 billion.
Other lines of business will remain competitive due to
excess capacity. Further rates reductions likely
in a number of sectors but overall gross written
premium to increase due to business growth.
Pakistan
Although 2014 results are yet to be declared, based on recent
trends there is a 15% and 18% growth in premium of Life and
Non-Life insurers respectively. Following the launch of Takaful
rules in 2012, conventional insurance companies have now
commenced Takaful Windows. Whilst still in a formative stage,
the projected growth rate is expected to be between 15%-20%
over the next 10 years, reaching US$7.4 billion in premium.
One of the major life & health insurers, Metlife Alico exited
Pakistan and have been purchased by IGI insurance Ltd.
The political situation is hampering foreign investment and
the devaluation of the currency has discouraged people
from investing in long-term investment vehicles.
Outlook for 2015
Over the next five years, Bancassurance and agency
distribution will remain the top method of distribution in
Pakistan. Rates remain flat to soft and clients will achieve
favorable pricing due to a general over supply of capacity
in the market. For industrial and complex risks, there is
currently not sucient capacity in the local market
and for the time being, the London and Singapore
markets will continue to play a pivotal role in
providing additional capacity.