Page 41 - WTW Asia Insurance Market Report
P. 41

Financial Lines (FINEX)                                       A number of significant events took place in Asia in 2016,
                                                              forcing managers and C-suite executives to think twice
Rates in 2016 were in free fall, with reductions varying      about the risks facing their organisations.
across the region, depending on the type of product.
Competition intensified among insurers, attacking accounts    A robust market is expected to continue in 2017, with no
by offering drastic rate reductions and enhancing coverage.   sign of diminishing competition or capacity. Markets will
Loss-free accounts with manuscript wording were awarded       continue to roll out coverage enhancements and buyers
enhanced coverage. Retentions were reviewed on a case-        will avail unprecedented value in the trade-off between
by-case basis, driven by the overall size of an organization  terms and price. A further reduction in rates is expected
and the professional services being provided. The key         in the coming year, as well as an influx of new capacity into
players in the market this year were Chubb, Allianz and       the market.
AIG. New and traditional insurers such as Antares and
Berkley sought to expand market, share, especially in the                 Growing Demand for Warranty and
professional liability space.                                             Indemnity Insurance

    The Monetary Authority of Singapore (MAS) withdraw        Asian corporates are quickly catching up to their private
    the merchant status of a wholly owned subsidiary of       equity (PE) counterparts in adopting the use of Warranty
    a bank established in Switzerland ensuing serious         and Indemnity (W&I) or Reps and Warranty insurance,
    breaches of anti-money laundering requirements,           especially when negotiating with a PE seller exiting a
    poor management oversight of the bank’s operations,       portfolio company or a buyer looking to differentiate their
    and gross misconduct by some of the bank’s staff.         bid. New insurers have been entering this sector,
                                                              leading to an increasing supply of W&I insurance capital
    An Oil and Gas company filed a petition to wind up        for M&A targets in a growing number of Asian jurisdictions,
    and liquidate the company after facing demands            including frontier and emerging Asian territories.
    from creditors amid a slump in offshore oil and gas       The market is therefore becoming more competitive,
    businesses, triggering investigations into potential      which benefits coverage, rates and capacity for larger
    lapses in disclosure.                                     transactions. W&I rates in Asia vary depending on the
                                                              nature of purchase agreement and the target’s business.
    A major telecom company in Singapore experienced          For single jurisdiction and mono-line targets, rates could be
    broadband outages that were the result of intentional     below 2% (relative to the W&I insurance coverage).
    and malicious damage in October 2016.
                                                              Cyber Risk Management Solutions

                                                              Cyber insurance is a huge but largely untapped opportunity
                                                              for the insurance market. Following the higher frequency
                                                              of incidences and significant losses associated with
                                                              cyber breaches, businesses are no longer ignoring the
                                                              reputational and financial risks posed by cyber threats.
                                                              Insurers are realising the value of providing clients with
                                                              end-to-end loss control, risk management solutions
                                                              and guidance in the event of a cyber-related crisis. In
                                                              August 2016, Chubb launched a Cyber Enterprise Risk
                                                              Management (ERM) solution in Asia-Pacific to move
                                                              beyond insurance and deliver tailor-made solutions to meet
                                                              specific client needs. This move underscores how threats
                                                              have evolved to become enterprise-wide issues and also
                                                              signals the growing needs of clients in this segment.
                                                              A number of insurers are expected to follow suit and
                                                              introduce integrated cyber solutions in the coming year.

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