The Asia Pacific region can expect tighter terms and conditions in the property market, as international reinsurers attempt to regain some of the losses caused by the series of disasters that have hit the region.
According to a report by Singapore Business Review (SBR), higher premiums on properties are predicted even as Standard & Poor’s Ratings Services said it believes the impact of the disasters between September 2010 and June 2011 on the overall financial profile of reinsurers would be manageable.
“Underwriting results for a number of global reinsurers with operations in Asia-Pacific were hit by the disasters, which included an earthquake and tsunami in Japan, two major earthquakes in New Zealand, and floods and a cyclone in Australia,” said Standard & Poor’s, and as quoted by SBR.
“However, outside Japan, regional domiciled rated reinsurers have limited or manageable exposure to the region’s catastrophic events as they write mostly domestic business.”
Information from AIR Worldwide showed that insured claims from these disasters could reach as much as S$51 billion.
“Prospectively, we could see higher property catastrophe reinsurance premiums and tighter terms and conditions — especially in Japan, Australia and New Zealand — as international reinsurers attempt to claw back some of the losses,” noted Standard & Poor’s.
Meanwhile, reinsurance pricing in the rest of Asia will likely be uncertain, “reflecting the counteracting effects of shrinking global reinsurance capacity and the competitive but rapid growth of primary insurance in the region.”
Standard & Poor’s said soft reinsurance pricing is expected to continue in several Asian markets, especially markets not prone to disasters such as Singapore, Malaysia and Thailand.
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