As 2025 draws to a close, Asia’s insurance market has a spring in its step. Profitability is up. Risk discipline is holding firm. Yet geopolitical uncertainty, climate change, technological upheaval and an oversupply of capacity continue to test (re)insurers’ resilience.
A recent report from Swiss Re provides a handy snapshot of the momentum that Asia Pacific has been able to sustain throughout the year, supported by strong growth in China and other emerging markets in the region.
Life insurance has a particularly favourable outlook in the region, with many (re)insurers viewing the sector as an attractive way of diversifying away from property and nat cat risk.
With the further normalisation of markets, (re)insurers are well-positioned for selective growth as they head into 2026. The 1:1 renewals are expected to be relatively uneventful, with downward pressure on rates continuing as risk discipline holds firm.
There are plenty of dangers still to watch out for, though.
The deadly fire that devastated the Tai Po housing estate at the end of November serves as a reminder of the damage that a single event can cause to the industry, with some suggesting that this could raise the combined ratio of Hong Kong’s non-life sector by up to 3 percentage points.
Uncertainty lingers in other areas as well. The rising risk of civil commotion or terrorism incidents taking place has led to a decoupling of price from the underlying risk. US-imposed tariffs are also reshaping the risk landscape (although they are also driving growth in certain segments of the market, such as marine and credit insurance).
Such precariousness makes it harder to accurately price risk, allocate capital and plan long-term strategies.
Against all of this lurk the risks that a softer market brings.
Commercial rates continued to fall globally this year, with the Asia and Pacific regions leading the declines.
Despite a steady rise in cyber claims over the years, capacity continues to pour into the market, driving down prices and undervaluing risk.
Rather than sacrifice prudent underwriting, many insurers are responding to these conditions by focusing on bespoke solutions and product innovations to win market share.
Could this be a blueprint for other market segments, too?
Competitiveness may be intensifying in APAC’s insurance market, but (re)insurers are keen to make sure that short-term growth opportunities do not come at the expense of long-term stability.
Nat cat diversification
Although this year has been relatively benign for natural catastrophe losses, it was the sixth consecutive year in which industry nat cat losses exceeded US$100bn. Understandably, (re)insurers are becoming increasingly anxious about how much of their book is exposed to this kind of risk.
As Malaysian Re CEO Ahmad Noor Azhari Abdul Manaf told (Re)in Asia earlier this year: “The risk of a single nat cat event wiping out gains remains ever present.”
This is why the industry—including Munich Re, Malaysian Re, Canopius, Peak Re, Mapfre Re—are seeking to diversify their business away from a heavy property and nat cat weighting.
At the same time, (re)insurers are increasing their use of risk-mitigation incentives and advanced analytics to gain a better understanding of their risk profile.
Such wariness about nat cat could yet constrain capacity in certain markets, even as rates soften elsewhere. For instance, both Taiwan and Japan are crying out for more reinsurance capacity to support their offshore wind farms – yet both countries are highly prone to weather-related events and earthquakes.
One area that could benefit from the diversification away from nat cat risk is the life and health sector.
At the start of the year, MAPFRE RE restructured its business to place life insurance at the heart of its global operations. Chief Regional Officer Javier Sánchez Cea says that a lot of this growth will come from APAC.
To end the year, Munich Re announced a new five-year plan, with Asia life and health as a key component.
Other reinsurers are pursuing similar strategies. Opportunities are especially plentiful in places like China, India and parts of Southeast Asia, given an ageing population, low insurance penetration and high wealth accumulation.
Swiss Re predicts that life premiums will surge in China by 9% this year, compared to 3.6% for non-life. Other emerging markets will see a rise of 6.4% for life, compared to 3.7% for non-life.
Marine: volatility and opportunities
In the marine sector, volatility persists. But there are plenty of opportunities as well.
The first half of the year saw a fresh spate of Houthi attacks in the Red Sea, forcing insurers to hike war risk rates. While such incidents have since subsided, the situation in the region still remains precarious.
Geopolitical risks are adding to marine uncertainty, with supply chain disruption forcing vessels onto longer routes, driving up claims and frequencies and severities.
Such trade fragmentation can also be an opportunity, though, with insurers reaching for innovative solutions to cope with this fundamental shift in risk. One area that could grow is parametric insurance. In March, the MV Maersk Saltoro lost an estimated US$130m in cherries, highlighting the possible use of this type of cover.
There will also be other opportunities. Data from the International Union of Marine Insurance shows that Asia generated 60% of global cargo insurance premium growth in 2024. China’s immense growth means it logged premiums just shy of US$4bn in 2024.
However, excess capacity and strong competition continue to drive down rates in the region, leading to uneven underwriting results and weaker pricing discipline across the sector. Market participants expect the soft market to continue until 2027, despite the uncertain risk environment.
Cyber
Cyber is another area that is ripe for some creative thinking.
Despite the rising number of claims worldwide, cyber capacity continues to pour into APAC, driving down rates and making it harder for existing players to compete for market share.
Pavlos Spyropoulos, APAC Regional Director for Tokio Marine Kiln, told (Re)in Asia that staying ahead of the pack means being able “to bring something new to the market”. Other cyber underwriters share similar views.
Cyber has a very low penetration level in APAC at the moment, especially among small-and medium-sized enterprises, meaning that there is plenty of opportunity for insurers to grow in the space – providing they get the risk management right.
“Individual markets across APAC are at very different stages of maturity, and there will be a mix of SMEs and corporate clients who have never purchased cyber cover before,” says Chris Baker, Head of Cyber, Asia at Munich Re.
Opening up: China and India
India and China continue to reform their markets, presenting fresh opportunities – and also challenges – for global players.
Earlier this year, the National Financial Regulatory Administration issued guidance to curb excessive underwriting expenses and improve data accuracy in certain classes of insurance, prompting AM Bast to maintain its stable outlook for China’s non-life segment.
The Chinese regulator also extended the C-ROSS Phase II transitional period to end-2025 to ease capital pressure and maintain solvency stability.
At the same time, Beijing has been liberalising parts of the market, outlining rules that will allow insurers to sell asset management products from trust companies.
In India, the most significant insurance-related event this year has been the passing of a bill that will allow foreigners to own up to 100% of an insurance company. Previously, they have only been allowed to own up to 74%.
At the same time, a slew of (re)insurers have set up in India’s GIFT City this year – including Berkley Insurance, Korean Re, Everest Re, Sing Re, and Peak Re – following efforts by the regulator to turn the free trade zone into a major insurance hub.
Structured solutions
Another theme that continues to rumble on this year is that of capital requirements for insurance companies, especially on the life side.
The large regional hubs of Singapore and Hong Kong introduced new risk-based capital (RBC) rules a few years ago, forcing insurers active in these markets to ponder balance sheet optimisation. Other regions,
Other markets – including Taiwan, Japan and India – are only just catching up, while Indonesia is stepping up its capital regime over the next few years. This is resulting in a scramble for structured solutions that can help ease the capital burden in these markets.
Asset-intensive reinsurance (AIR), which has seen a lot of deal activity this year, can also provide some flexibility for dealing with capital requirements. Though supervisors are now starting to keep a closer eye on the space.
AI and technology
Another area to watch is the growing impact of AI in insurance.
Over the last week, Chubb said it could reduce its headcount by 20% as a result of the automation of core functions.
Munich Re’s new five-year strategy targets €600m in annual cost savings by 2030. Technology drives these savings, though the reinsurer has not detailed specifics around how the savings will be achieved.
A slew of Life and health insurers have introduced or are planning to introduce AI centres, including Manulife, FWD, and Prudential.
One thing is for certain: AI is not going away. But 2026 should paint a better picture on whether the technology can truly lives up to its promise. Or peril.
The year ahead
The past 12 months have been a year of cautious optimism for APAC’s insurance markets.
While profitability and growth, especially in life insurance, have strengthened, insurers continue to navigate a landscape marked by geopolitical uncertainty, natural catastrophe risks and softening markets.
As the region heads into 2026, the ability of (re)insurers to balance growth opportunities with disciplined risk management will determine who thrives in increasingly complex market conditions.
Strategic diversification, continued rate softening, the ongoing impact of AI, and broader macroeconomic and geopolitical factors—including tariffs and regional tensions—point to 2026 being another interesting year for Asia Pacific’s insurance industry.
