BEN DUNSTON: Thanks, Clara. Yeah, absolutely. I mean, we usually begin by reminding clients and listeners that Asia is an extremely diverse region in terms of regulatory approach, cultural values, and insurance market conditions.
China, Taiwan, India, and Korea all have strong domestic insurers set up to support the business environment and service priority industries, such as semicon and complex manufacturing for North Asia; healthcare and financial services in India; Singapore, and Hong Kong have large wholesale markets and provide support for other regional risks much aligned to international markets like London or Bermuda.
But let's talk immediately about rate environment, which for non-loss impacted and non-NatCat exposed risks, we're seeing a transitioning market with around 7.5% to 12.5% rate reductions for property, marine cargo, casualty and energy. Financial lines risks, sometimes sees larger rate reductions if the risk is well managed and in appetite for a large number of insurers. And that's the key-- if this is a risk that is well sought after, there's an increase in competitive environment there as well.
CLARA GOH: Talking about insurers, do the insurers' earnings results point to any of the trends we are seeing in the market conditions more broadly? What can you tell us on that?
BEN DUNSTON: Yes, I think that's very fair to make that connection. I mean, the combination of recent impressive underwriting results seen broadly across the industry and aggressive growth plans, notably around expansion in Asia, has led to increased competition and pressure on pricing at the tail end of 2024, and we expect that to continue in 2025.
Lloyd's of London is a great barometer of the international wholesale market, and recent results there show the combined ratio of 86.9%. And if you combine that with the excellent wider industry profit for the third or fourth year in a row, growth plans and new capacity, it's reasonable to think that conditions will continue to soften.
CLARA GOH: So under these conditions, can clients expect risks to be priced in the same way throughout the world, across Asia, London, and other capacity hubs?
BEN DUNSTON: Broadly speaking, yes. But we've seen London markets focusing on some acquisitional growth at the end of 2024, notably in cyber and terrorism. When there are new market entrants competing for the same premium pool and capacity hubs trying to grow market share against each other, often this can lead to volatility in the pricing environment. Generally speaking, there's ample capacity for domestic insurers in Asia, and it's commonly capacity-driven placements or highly specialized products that would find their way out to other geographical markets.
CLARA GOH: What placement advice would you then give to clients taking their risk to the markets?
BEN DUNSTON: Well, for large and complex risks, we would suggest reviewing the program limits, the sub-limits, and the coverage well before the inception date and going to market with up-to-date valuations and risk information. Clients can expect their panel of insurers and reinsurers to be more active in providing support across the entirety of the coverages that they buy, and engaging the insurers more broadly allows for the best results during negotiation. If a client's risk requires international reinsurance support, there may be differences in rating conditions between the domestic market and the international market, so we would advise the client to speak to the broker about searching international markets for capacity so they can get the best pricing and service outcomes.
CLARA GOH: What about losses from natural catastrophes, such as the huge wildfire in California? Can these impact clients in Asia?
BEN DUNSTON: Although it seemed like a long distance geographically, global losses do impact the global insurance industry more generally-- though through pricing of treaty reinsurance, which then filters down to direct and FAC. Verisk put the annual new normal at $150 billion worldwide.
Global NatCat losses in 2025 are already a third of the 2024 number, with a long way to go until the end of the year. Notably, to your point around the California wildfires, industry expectations are around $40 to $50 billion, with around 50% of this sitting with specialist reinsurers, but not expected to be even close to a capital event for any one of those. Treaty renewals in Japan and India will be interesting to watch, though reforms in both of these domestic insurance markets are likely to be of more focus than any estimated NatCat impact from the wildfires.
CLARA GOH: So should clients expect any changes to coverage when they bring their risks to the markets?
BEN DUNSTON: Well, we don't see any additional exclusionary language coming from any specific geographical market or the international wholesale market. For large and complex risks, we would always recommend that the coverage is reviewed in advance, so the brokers can explore what's available in the market on behalf of the clients.
CLARA GOH: Lastly, with the insurance market looking to grow fast, does this bring any interesting market developments for clients based in Asia?
BEN DUNSTON: Many insurance industries around Asia provide capital support to industries of national interest, whether that's, for example, agriculture or health in India. And they're expected to provide solutions in support of that, especially if there's an element of government shareholding. International insurers are looking to grow their footprint and take new joint venture partners. Again, India and Japan markets are in focus. And although China's domestic market giants have recorded huge revenues and profit in 2024, it remains to be seen whether international insurers see China as an opportunity for geographical expansion. We would expect more support for Southeast Asia clients as insurers look to grow that segment of their inwards wholesale book. And foreign direct investment from North Asia flows into Southeast Asia through construction and infrastructure projects, logistics, and manufacturing.
The other interesting market is in Taiwan. We're seeing relatively small NatCat events that can give rise to very large business interruption losses for complex manufacturing in the semiconductor space. In addition, the growth of the data center industry around concentrated areas and sites, those with stable power supplies, notably Malaysia, is creating pockets of aggregation concerns for major insurers.
And lastly, the real estate businesses with growth plans in the data center sector and their tenants can expect to see this capacity tighten up significantly. Those would be the main areas that we're seeing develop alongside geopolitical concerns and alongside the focus on complex manufacturing.
CLARA GOH: Thank you for your insights on this episode of the podcast. We will hear from you again at the next one.
BEN DUNSTON: Thank you very much.
NARRATOR: Thank you for joining this WTW podcast featuring our latest global market commentary. WTW offers insurance-related services through its appropriately licensed and authorized companies in each country in which WTW operates. For further authorization and regulatory details about our WTW legal entities operating in your country, please refer to our WTW website.
It is a regulatory requirement for us to consider our local licensing requirements. The information given in this podcast is believed to be accurate at the time of publication. This information may have subsequently changed or have been superseded and should not be relied upon to be accurate or suitable after this date.
This podcast offers a general overview of its subject matter. It does not necessarily address every aspect of its subject or every product available in the market, and we disclaimer all liability to the fullest extent permitted by law. It is not intended to be, and should not be, used to replace specific advice relating to individual situations. And we do not offer, and this should not be seen as, legal, accounting, or tax advice.
If you do intend to take any action or make any decision on the basis of the content of this podcast, you should first seek specific advice from an appropriate professional. Some of the information in this podcast may be compiled from third-party sources we consider to be reliable. However, we do not guarantee and are not responsible for the accuracy of such. The views expressed are not necessarily those of WTW. Copyright WTW 2025. All rights reserved.
