The property insurance market in Asia is currently caught in the balance between growing premium volume and reducing premium rates. Premium volume growth is being fuelled by Asia’s booming economy, while reducing premium rates are being driven by competition among insurers and the growing recognition by buyers of the rewards to be had from quality risk-management practices. While underwriters insist that returning an underwriting profit is their key goal, we believe that they are also driven by a desire to maintain or grow market share. The pressure from insureds for rate reductions, combined with a competitive insurance market and underwriters’ need to maintain market share, will fuel the continuation of market softening in 2005.

Asia is a diverse and expanding market with abundant opportunity for insurers to expand and win new business. However, buyers in the region are very price conscious and demanding and will shop around to get what they consider to be the best deal. Accordingly, the buyers anticipate competitive behaviour from insurers keen to grow, and expect rates to come down further in 2005. Some insurers are justifying the continuing softening to themselves by citing the increased volume of premium they are achieving from their growing book of business.

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