Explore the 2025 outlook on reinsurance market trends in Greater China, focusing on growth drivers and emerging opportunities.
At the onset of 2025, the reinsurance landscape in Greater China reflects a balanced equilibrium between supply and demand. According to a recent report by global insurance and reinsurance broker Aon, the April 1 renewal conditions are building positively on the trends observed at the start of the year.
In the Greater China market, the availability of capacity is on the rise, fostering a competitive environment. Consequently, pricing for property risks without recent loss history has seen a decrease by low double-digits during the 1/1 renewals. In contrast, price hikes have been confined primarily to programs that have experienced losses.
Despite facing economic and geopolitical challenges, the demand for reinsurance in China remains stable. Insurers are largely satisfied with their existing limits, while inflation rates continue to be low. Aon anticipates a single-digit growth in premium generation from China’s insurance market in 2025.
The broker notes that terms and conditions have remained largely unchanged during recent renewals, with competitive focus shifting more towards rates than coverage terms. Discussions around flood modeling have intensified following Typhoon Yagi in September 2024, which resulted in $700 million in insured losses. The unexpected flood damage has prompted a reassessment of typhoon models, potentially influencing future property catastrophe renewals in China.
Reinsurers with exposure to the earthquake that impacted the Yujing district in Taiwan on January 20, 2025, are likely to prioritize profitability in upcoming renewals. While this quake was not a major loss event, it occurs as the industry evaluates wildfire losses in California.
Aon highlights growing interest in alternative reinsurance products, including parametric solutions, catastrophe bonds, and sidecars. The governments and regulatory authorities in both Hong Kong and China are keen to promote the catastrophe bond market. Increasingly sophisticated reinsurers and insurers in the region have successfully engaged in catastrophe bond transactions and are actively exploring sidecars to leverage third-party capital sources.
In 2021, Aon successfully structured and placed a $30 million catastrophe bond for the China Reinsurance Group. This marked the first-ever catastrophe bond issued from a Hong Kong-based special purpose insurer. Given the region’s low insurance penetration and significant exposure to natural catastrophes, there exists a substantial long-term growth opportunity for the Insurance-Linked Securities (ILS) market.
Overall, Aon expects the conditions in Greater China to continue favoring clients throughout 2025. However, caution is advised in the property catastrophe reinsurance markets due to the early-year catastrophe losses.
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