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| Staff Reporter, Singapore
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Here's why reinsurance market could boom in Asia soon

Insurance penetration in Asian markets is just 5.73%.

In its recent report about Asian reinsurance markets, Fitch believes there is significant room for the reinsurance market in Asia to grow given relatively low insurance penetration in Asian markets. 

Growth momentum is expected to be boosted by increasing risk awareness and continued demand for reinsurance protection by the direct insurance companies in the region, especially in the wake of multiple natural catastrophes that have occurred in recent years.

Here's more from Fitch:

Asian economies constitute a significant component of the global economy (33.0% of global GDP), along with 59.2% of the world’s total population1 in 2012. However, the total insurance penetration rate in Asia was 5.73% in 2012, compared with 8.03% in the US and 11.27% in the UK.

In particular, three of the most populated emerging markets in Asia: China, India, and Indonesia, had relatively low penetration rates (from 1.77%-3.96%). These markets, with rising household income and rapid industrialisation, contain 68.6% of Asia’s population.

Reinsurance coverage in Asia remains small compared with global reinsurance coverage. Asia and Australia are estimated to contribute about 10%-15% of global reinsurance premiums, according to industry projections and the International Association of Insurance Supervisors.

Fitch envisages a trend of new Asia-based reinsurers being set up to tap the extensive reinsurance business potential in the region.

The latest entrant is Peak Reinsurance (Peak Re), which was set up in January 2013 in Hong Kong. Peak Re was initially capitalised at USD550m; it focuses on underwriting property and casualty reinsurance business across Asia, particularly the emerging Chinese market.

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