Asia Pacific property premiums forecast to top $141bn by 2027

Property premium volume across the Asia Pacific (APAC) region is expected to expand at a compound annual growth rate (CAGR) of 11.3 percent over the next five years, according to a report by GlobalData.

The data and analytics company said it expected property gross written premium in the region to total $141.8bn by 2027, compared with an estimated $92.3bn in 2023.

The growth is expected to be driven by several factors, including rising demand to cover natural catastrophes, investments in infrastructure projects, innovations in insurance products and regulatory requirements.

The three largest APAC markets – China, Japan and Australia – currently account for around 76 percent of the region’s property premium base.

China, which is currently the largest regional market with a 35.3 percent share of premiums, is set to record a CAGR of 14.4 percent over the next five years, in part driven by increasing demand for cover against natural catastrophes.

Parametric insurance is expected to play an important role in this growth. Manogna Vangari, insurance analyst at GlobalData, said there had been increased interest in parametrics since April this year, when the China Banking and Insurance Regulatory Commission told insurers to expand and improve the efficiency of agricultural insurance coverage and products.

“Since then, insurers have expanded parametric insurance from agricultural insurance – mostly to cover losses caused by drought – to earthquake insurance, business interruption insurance, renewable energy insurance against weather risks, and insurance against tropical cyclones,” Vangari said.

Japan remains the second-largest market in the region with an expected CAGR of 9.1 percent to 2027, with factors contributing to growth including a rise in fire insurance premiums driven by increased climate risks, along with investments in construction, energy and infrastructure projects.

Australia, which currently holds a 15.6 percent share of written premiums, is expected to deliver an 11.7 percent CAGR over the next five years, with growth primarily attributed to the rise in fire and home multi-risk insurance premiums.

The report notes that Australian insurers have raised premiums or minimised their exposure recently to tackle unsustainable losses and rising pressure from reinsurers.

“New business opportunities and support from the government are also expected to support property insurance growth in Australia. The Australian government introduced the decennial liability insurance product in October 2022, which will create new business opportunities for insurers. The product covers critical parts of a residential apartment, including fire systems and waterproofing, to help owners maintain the building,” Vangari said.

India and New Zealand are also driving regional growth, with the two countries forecast to expand by 8.7 percent and 10.6 percent respectively over the next five years.

"Growing demand in the construction and energy sectors, coupled with rising premium prices, is expected to support property insurance growth in the APAC region over the next five years,” noted Vangari.

She added: “Portfolio adjustments to limit high severity loss exposure and maintaining profitability will remain a key focus for APAC property insurers."