Insurance growth in the Asia Pacific region is more “bullish than ever before” despite natural disaster costs that are the highest total since 2013.
Aon Impact Forecasting revealed the cost of natural disasters for the region, as well as global costs, which saw China hit by $33 billion worth of economic damage due to flood last month
, with disaster costs at their highest levels since 2013.
“Economic losses resulting from natural disasters through the month of July in Asia-Pacific are already at USD85 billion for the year,” Steven Bowen, director (meteorologist) at Aon Impact Forecasting told Insurance Business
“This makes 2016 the highest cost year for the region since 2013.
“The losses are above the most recent 10-year median (USD71 billion), but still below the 10-year mean (USD101 billion). The historic year in 2011 for the region remains the costliest on record at USD368 billion.”
Despite high economic losses from disasters, Bowen said that the market across Asia Pacific is still poised for high levels of growth.
“Asia represents one of the fastest growing regions of the world for insurance uptake,” Bowen continued.
“Studies have shown that the non-life insurance market could show up to 17 percent annual growth by 2017. A few of the countries leading this growth include China, India, Taiwan, South Korea, Indonesia, Singapore, Philippines, Thailand, and Vietnam.
“As the socioeconomics improve in APAC, the opportunity for the insurance industry to grow in the region is certainly more bullish than ever before.”
Impact forecasting noted that the Chinese damage saw less than 2% of economic costs covered by insurance and Bowen said it is important for the industry to educate and communicate on the values of insurance for the region.
“The biggest thing is to continue to create awareness of the potential risks associated with catastrophic events,” Bowen said.
“Population trends in APAC and around the world continue to show increased urbanization in cities along major coastlines.
“This has considerably increased the amount of exposure in highly vulnerable locations. It will be important for local governments and the insurance industry to continue working together to better highlight the specific natural hazard risks to improve mitigation efforts.
“This will lead to impacted populations being able to get back on their feet quicker in the aftermath of an event.”
With disaster costs already at historic levels, Bowen said that events will continue across the region but it is “very difficult” to pinpoint areas to watch.
“The weather never stops and earthquake risk is always a real threat in Asia-Pacific.
“It’s very difficult to pinpoint specific events happening, but the daily reality is that natural catastrophes are going to happen and we all need to be prepared for when the next major event strikes.”
China flooding caused $33 billion in economic damage last month
Aon reports results for second quarter of 2016