Natural disasters help insurance industry grow in Asia
Asia’s vulnerability to natural disasters is helping drive the insurance industry in the region, an international conference in Singapore heard on Wednesday.
Rising affluence resulting from strong economic growth and the region’s expanding ranks of the elderly are the two other major factors expected to boost the industry, Singapore’s central bank chief told the conference.
“The prospects in Asia are especially bright. The Asian risk landscape is transforming rapidly, generating robust demand for insurance and reinsurance,” said Ravi Menon, managing director of the Monetary Authority of Singapore.
Menon said in a speech at the Singapore International Reinsurance Conference that the insurance business in Asia is projected to grow at about 8 per cent per year over the next decade.
By 2020, Asia is forecast to account for almost 40 per cent of the global market, he said.
One major driver is Asia’s vulnerability to natural calamities, Menon said, pointing out that the region accounted for 52 per cent of global economic losses from disasters between 2000 and 2009.
In 2011 alone, Asia accounted for 81 per cent of global economic losses, of which only about 35 per cent were insured, he said.
“A growing risk awareness, coupled with rising asset values, will lead to greater demand for catastrophe insurance and reinsurance, including alternative risk transfer solutions,” Menon said.
“Following the 2011 catastrophes, several Asian countries have already established insurance pools for catastrophe risks.”
Asia’s continued robust economic growth and its ageing population will also help power the insurance industry ahead, Menon said.
He cited data showing that by 2050, the Asia-Pacific region will be home to 62 per cent of the world’s elderly population, with one in four people aged 60 and above.