Guy Carpenter's Tony Gallagher explores the outlook for insurers and reinsurers in Asia Pacific
The 2025 reinsurance renewal cycle saw a transition from a sellers' market to a buyers' market in Asia Pacific, characterised by widespread rate reductions. The drivers of this change were increased capacity against a backdrop of modest catastrophe loss activity and positive reinsurance results over recent years.
Understanding Market Dynamics
In today's evolving landscape, success hinges on the ability to navigate heightened volatility, capitalise on growth opportunities in a softening market and grow capital without escalating risk exposure. The APAC region will continue to be a strategic priority for reinsurers in 2026, underpinned by strong underlying growth and a track record of robust (re)insurance results.
- Growth: Insurance penetration continues to deepen across APAC, fuelled by greater understanding of insurance's critical role in economic stability and development. Enhanced risk management standards are improving underwriting quality, while persistently low inflation is easing pricing pressures and reducing reserving risks across key lines, such as property, motor and casualty.
- Volatility: Although APAC's catastrophe losses represent a relatively small share of global losses, ranging between 7% and 10%, the frequency of smaller loss events (below $2 billion) has surged by roughly 30% above the 10-year average. Given current treaty attachment points, most of these smaller losses are retained by cedants, which increases profit volatility and underscores the need for a refined risk management strategy.
- Capital: In northern Asia, well-capitalised insurers are actively pursuing expansion, while in continental Asia, IFRS 17 accounting standards are expected to drive market consolidation. The key change in 2026 will be the introduction of earnings protection covers, enabling insurers to protect capital from the growing volatility in underlying results, thereby sustaining financial resilience in the overall portfolio.
Future Growth Opportunities
With the rise of secondary perils, cedants in the region are increasingly leveraging reinsurers' appetite for alternative risk management solutions, such as catastrophe bonds, structured solutions and sidecars, which continue to grow across APAC,
Reinsurers' dedicated capital is projected to reach approximately $650 billion by year-end 2025, the highest level since 2018, supported by strong retained earnings and growth in insurance-linked securities capital. Reinsurers are expected to maintain strong profitability, attracting investors to both traditional and alternative capital.
In APAC, softening market conditions and easing rates encourage cedants to reinvest premium savings into innovative protection programs, particularly in renewable energy sectors, including solar, wind and battery storage. These sectors' rapid growth has increased reinsurance demand due to weather and technology risks.
Partnering with MGAs offers a strategic path to access niche markets and innovative distribution channels. MGAs lower the "cost of entry" for underwriting specialised risks, accelerating growth and fostering innovation in underserved segments.
Looking Ahead to January 1
The market is expected to continue its softening trend, influenced by the unfolding dynamics of catastrophe risks, geoeconomic factors and geopolitical developments. New opportunities will emerge from product innovation, structured solutions and parametric products, which can help address some of the complexity currently surrounding the industry. The upcoming reinsurance cycle is likely to shift focus from softening toward strategic optimisation, presenting an ideal opportunity for clients to enhance protection across earnings, capital, perils and growth.
How Guy Carpenter Can Help
At Guy Carpenter, we deliver unmatched insights into the global (re)insurance market to help clients achieve capital, growth and volatility objectives. Our strategic experts continuously innovate to address evolving risks. By partnering with advanced analytics teams, cedants and reinsurers collaborate to create tailored capital solutions. Improved underwriting and data quality reduce pricing uncertainty and product complexity, driving business growth and enhancing capital returns in upcoming renewal cycles.