Despite potential rate decreases, growth of the insurance industry in Asia is expected to be sustained in 2024, driven by rising demand in underpenetrated insurance markets such as China, Southeast Asia, and India, says CreditSights, a research unit of Fitch Solutions.
In its forecast for the insurance sector in Asia, CreditSights names several other key themes, which are:
Medical insurance, retirement, and savings products are projected to remain as primary growth drivers. CreditSights anticipates the introduction of new products related to long-term care and dementia insurance in Asia.
Asian insurers are likely to continue with substantial investments in technology, data analytics, and customer service enhancement as a means to differentiate themselves.
CreditSights expects a continued expansion of agency forces and bancassurance partnerships, which will maintain their respective positions as the core distribution channel and primary growth contributor.
The trend of overseas expansion to Southeast Asia via M&A or additional capital injections from mature insurers in developed markets such as Japan, Korea, and Hong Kong is predicted to continue.
Regulatory developments
In Korea, CreditSights expects further adjustments and disclosures concerning K-ICS and IFRS 17. These are set to enhance the consistency of solvency calculations across companies, fine-tune accounting standards, and improve transparency in the insurance sector. Regulatory easing measures are expected to remain so that to aid insurers during the transition to the new solvency regime.
Key regulatory developments anticipated for 2024 include the implementation of the RBC regime in Hong Kong, the ramp-up in guidelines and regulations related to IFRS 17 in Thailand before the effective date in 2025, and the finalisation of the ESR framework in Japan.
CreditSights expects clearer stances from credit rating agencies regarding their Contractual Service Margin (CSM under IFRS 17) treatments on their capital models, and the implications these have on financial strength assessments.
Hong Kong
After a robust recovery in sales to Mainland Chinese visitors (MCVs) in 2023, CreditSights expects the growth of Hong Kong life insurers to moderate in 2024. The vast majority (over 95%) of policies purchased by this customer group are settled on an annual basis rather than as single premiums, indicating potential for further premium growth. MCV policyholders tend to favour whole life and critical illness products in Hong Kong, due to the superior healthcare services, attractive returns and wide variety of investment options available in this market.
