The insurance market in Central and West Asia is undergoing significant changes. Domestic insurers are increasingly turning to reinsurance to fill gaps left by a reduction in global reinsurance capacity, according to a recent report by AM Best.
Shift in Reinsurance Market and Local Opportunities
AM Best’s report highlights how insurers in Central and West Asia are shifting their focus due to a decline in globally sourced reinsurance capacity. This decline, largely attributed to the exit of Russian reinsurance capacity following economic sanctions in 2022, has created new opportunities for local carriers.
Seeking Growth in Competitive Domestic Markets
Domestic insurers are facing a highly competitive market environment, which limits their ability to grow organically. As a result, they are increasingly looking to expand into international reinsurance markets. This strategy aims to diversify their portfolios and build a presence in global markets.
Risks of International Expansion
While expanding internationally could enhance insurers’ market profiles and open new profitable growth avenues, AM Best also warns of significant risks. Todor Kitin, senior financial analyst at AM Best, stated that the risks are particularly high for insurers who lack the necessary expertise to operate in unfamiliar markets. Without the right knowledge and experience, these insurers may struggle to effectively manage the complexities of new international markets.
Conclusion
The move towards international reinsurance markets offers substantial growth opportunities for insurers in Central and West Asia. However, AM Best cautions that these opportunities come with risks. Insurers will need to carefully manage these risks and ensure they have the right expertise before expanding into new markets.
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