Written premium for the marine, aviation and transit (MAT) insurance industry in Asia-Pacific is projected to grow from over US$11 billion in 2019 to well over $14 billion in 2025, although the aviation sector may struggle in its recovery from the pandemic.
Data and analytics firm GlobalData has issued an insight report, “Global Marine, Aviation and Transit Insurance Market to 2025 – Key Business Lines, Trends, Drivers, Challenges, Regulatory Overview and Developments”, which revealed that the MAT insurance industry in Asia-Pacific will grow at a compound annual growth rate (CAGR) of 4.4% over 2019-2025.
Deblina Mitra, Senior Insurance Analyst at GlobalData, explained: “Air-travel restrictions, supply chain disruptions and weak economy slowed the industry’s growth in 2020 in Asia-Pacific.”
Japan and China, which are among the top five global markets, collectively accounted for 60% of Asia-Pacific’s premiums in 2020. China’s intricate presence in global supply chain and its growing airline and marine fleet are strong growth drivers for insurers.
However, Asia-Pacific has also seen several insurers withdrawing from MAT industry due to years of unsustainable losses resulting from both man-made and natural hazards and bottomed out premium prices which resulted in reduced market capacity.
Allianz, Swiss Re and Ascot have withdrawn from Singapore while Axa-XL withdrew from hull underwriting in Hong Kong and marine liability in Singapore in 2020. However, impact on premium price increase due to these market exits were mostly offset by the entry of new players such as China-based Donghai Marine Insurance and the resurgence of Lloyd’s syndicate’s presence in the region.
Mitra added: “The enactment of new sulphur limits as per the International Maritime Organization ruling in 2020 is a development that aims to tackle global warming contributed by the maritime sector and is a focus area for insurers.”
The regulation mandates shipowners to make changes in ship parts and fuel to comply with the standards. This exposes insurers to high claim risk and can lead to increase in prices.
Mitra concluded: “Delayed recovery in the aviation sector and uneven progress of vaccines will continue to restrict the growth of aviation premium in the region this year.”
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