Insurance rates in Asia have fallen once again in the first quarter of 2025, marking the fifth consecutive quarter of declines. This trend is due to strong competition and cautious underwriting practices by insurers.
Rates Fall Amid Strong Competition and Underwriting Discipline
According to Marsh’s Global Insurance Market Index, insurance rates in Asia dropped by 3% in Q1 2025. This decline is the fifth quarter in a row that rates have decreased. The last time rates saw an increase was in Q1 2023, when they rose by 1%.
Property insurance rates also decreased by 3% during the same period. Despite this reduction, insurers have remained strict in their underwriting practices, particularly for high-risk sectors, struggling businesses, and accounts with a history of claims. Accurate valuations of properties have become a key focus for insurers.
Changes in Insurance Agreements and Alternatives Gaining Popularity
In the latest news, long-term agreements (LTAs) have become more common, often including clauses for rate reductions and bonuses for low claims. Many clients are also exploring alternative risk transfer solutions, such as parametric and captive insurance. These options allow businesses to reassess their deductibles and consider self-insurance approaches.
In addition to these developments, international and wholesale markets have contributed to more favorable outcomes for clients across different insurance programs.
Casualty and Workers’ Compensation Rates Show Mixed Trends
Casualty insurance rates experienced a decline of 2%. Organizations without recent claims or those benefiting from competitive London market capacity saw rate reductions between 5% and 10%. However, businesses with significant exposure to the U.S. saw their premiums rise, particularly for primary and umbrella coverage.
While workers’ compensation and auto liability rates remained relatively stable, Japan and Thailand saw increases in auto liability rates, rising by 5% to 10%. Insurers’ approaches to PFAS-related risks varied, with some applying broad exclusions, while others offered selective coverage.
Financial and Professional Lines See Sharp Declines
The steepest rate drops were observed in financial and professional lines, where rates fell by 8%. With limited activity in capital markets, there was less new business, leading to more intense competition for renewals. Directors and officers (D&O) liability insurance rates dropped by 10% to 20%, and rates for professional indemnity (PI) and financial institutions (FI) also fell by 5% to 10% due to strong market competition.
Cyber Insurance Rates Decrease Amid Rising Ransomware Concerns
Cyber insurance rates also decreased by 8%, driven by new providers entering the market and increased capacity from existing insurers. However, despite this increased competition, concerns about ransomware attacks, particularly those involving data encryption and business interruption, remain high.
Insurers and reinsurers are currently reviewing war and infrastructure exclusions. Discussions are also underway about physical damage coverage and “silent cyber” risks, leading to broader property-related offerings across the region.
Conclusion
The commercial insurance market in Asia continues to experience rate declines due to a competitive environment and strict underwriting practices. While businesses benefit from lower premiums in many areas, challenges remain, especially for companies with significant exposure to U.S. markets or those dealing with cybersecurity risks. As the market evolves, alternative risk transfer solutions and changes in underwriting strategies are likely to play a significant role in shaping the future of the industry.
Related topics：
