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The property insurance industry in Asia-Pacific (APAC) is projected to grow from $85.8bn in 2020 to $137.5bn in 2025, in terms of written premiums, according to GlobalData, a leading data, and analytics company.
GlobalData’s insight report, ‘2021 Global Property Insurance Market’, reveals that the property insurance industry in Asia-Pacific will grow at a compound annual growth rate (CAGR) of 9.9% over 2020-2025, supported by the increasing demand for insurance against natural hazards and commercial developments.
Kotu Keerthi Naimisha, Insurance Analyst at GlobalData, comments: “Asia-Pacific’s exposure to high severity natural-catastrophes (Nat-cat) in the last few years has resulted in strong awareness and demand for property insurance. Premium growth is also driven by a consistent increase in insurance prices across the region since 2017, resulting from heavy Nat-cat losses, a trend that is expected to continue in 2022.”
Commercial expansion and infrastructure development, along with regulatory support to develop sustainable property insurance products, have provided further impetus to the property insurance industry, which grew at a CAGR of 9.0% during 2016 -2020.
Japan is the largest market in the APAC region, accounting for 30% of the region’s written premiums in 2020. The country’s exposure to high severity earthquakes, floods, and storms has been a consistent driver for property insurance in the country.
With 26% of the region’s written premium, China is the second-largest property insurance market. Agriculture insurance is the major growth driver for property insurance in China and accounted for over 50% of the property insurance premiums. The uptake of agriculture insurance has increased due to its availability at a subsidized premium rate with support from the government.
Along with the demand from agriculture, insurance to cover large-scale ongoing projects such as one-belt-one-road and renewal energy projects aided in the growth of property insurance in China.
Australia, India, and South Korea with a collective share of 30.8% were among the top five markets in the APAC region in 2020. In India, agriculture and fire insurance are key lines of property insurance with agriculture accounting for over 60% of the property insurance premiums in 2020. Premium collection from this business line is expected to be impacted by the 2020 regulation, in which the government withdrew the provision of mandatory insurance to secure agriculture loans.
Naimisha concludes: “Economic growth and growing demand from agriculture industry will support demand for property insurance in APAC region over the next five years. Product development for affordable Nat-cat insurance will be another focus area for insurers over the coming years.”