QFC releases first Asia Reinsurance Barometer

by  — 6 November 2013

Overall, says Qatar Financial Centre, the reinsurance business sentiment in Asia is strong despite the outlook on pricing and profitability for the next twelve months slightly waning.

On the back of a relatively stable political environment, well-established regional reinsurance hubs and strong gross domestic product (GDP) and premium growth expectations, Asian markets reveal the strong position of its reinsurance markets.

The report is based on demographic factors, low average insurance penetration rates and product innovation, both in insurance and reinsurance. Measured on a scale from -5 to +5 (very bearish to very bullish), average sentiment stood at 1.9. However, the trend is negative. About 12 months ago, business confidence was stronger at 2.3. Over the next 12 months, average business sentiment is expected to deteriorate further, reaching a value of 1.7, mainly reflecting an economic slowdown, a negative outlook on reinsurance prices, increasing regulatory/compliance and personnel costs, and hence declining overall profitability.

An overwhelming majority (96 percent) of all respondents expect a further increase in reinsurance capacity over the next 12 months, as the region remains an attractive growth market. This trend is a concern for most reinsurers, as margins will come under additional pressure. 

Shashank Srivastava, chief executive officer and board member of the QFC Authority said, “Asia is one of the fastest growing reinsurance markets in the world and a strategic priority for any aspiring international reinsurer. Given the ever-closer economic ties between Qatar and Asia, it was only natural for the QFC Authority to extend its proven barometer survey to the Asian reinsurance marketplace.”

You can read the entire report here.

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