Disaster risks help drive Asia’s insurance industry

SINGAPORE - Agence France-Presse

Villagers take pictures of Mount Sinabung erupting from a food stall at Simpang Empat village in Karo district, Indonesia’s Sumatra province. REUTERS photo

Asia’s vulnerability to natural disasters is helping drive the insurance industry in the region, an international conference in Singapore heard yesterday.

Rising affluence resulting from strong economic growth and the region’s expanding ranks of the elderly are the two other major factors expected to boost the industry, Singapore’s central bank chief told the conference.

“The prospects in Asia are especially bright. The Asian risk landscape is transforming rapidly, generating robust demand for insurance and reinsurance,” said Ravi Menon, managing director of the Monetary Authority of Singapore.

He said in a speech at the Singapore International Reinsurance Conference that the insurance business in Asia is projected to grow at about 8.0 percent per year over the next decade.

By 2020, Asia is forecast to account for almost 40 percent of the global market, he added.

One major driver is Asia’s vulnerability to natural calamities, Menon said, pointing out that the region accounted for 52 percent of global economic losses from disasters between 2000 and 2009. In 2011 alone, Asia accounted for 81 percent of global economic losses and only about 35 percent were insured, he said.

“A growing risk awareness, coupled with rising asset values, will lead to greater demand for catastrophe insurance and reinsurance, including alternative risk transfer solutions,” Menon said.

He cited data showing that by 2050, the Asia Pacific region will be home to 62 percent of the world’s elderly population, with one in four persons aged 60 and above.