What is happening in the insurance market in 2023?
What is happening in the insurance market in 2023? | Insurance Business Australia
Insurance News
What is happening in the insurance market in 2023?
S&P shares market forecasts
Insurance News
By
Roxanne Libatique
S&P Global Ratings (S&P Global) has delved into the 2023 global insurance market and warned of ongoing pressure for some sectors.
Its report found that primary insurers started 2023 with a positive outlook due to the post-COVID-19 pandemic recovery.
Currently, 85% of S&P-rated insurers globally still have a positive outlook. However, the report warned about the ongoing pressure for the US property and casualty (P&C), global marine liability, and Latin American insurance sectors.
“Our view on the global reinsurance sector also remains negative, albeit close to the tipping point for credit stability, while our view on the global insurance services sector remains stable,” the report said.
Asia-Pacific insurance market forecasts
Life insurance
S&P said it expects challenging markets to weigh in on Asia-Pacific insurers’ earnings this year. However, it anticipated that Australian and New Zealand insurers will have less exposure to interest rate and longevity risks than those in other markets. Meanwhile, it predicted that the Japanese life insurers would see lower COVID-19-related claims, but foreign-exchange hedging costs will remain high.
“We expect their profitability to improve in 2023 on the back of sustained premium-rate rises, scale efficiencies, and ongoing reforms of disability income,” the report said.
P&C insurance
Asia-Pacific insurers will continue increasing their premiums and re-evaluating their reinsurance arrangements, with a strong premium-rate increase to support earnings, according to the report.
In Japan, S&P predicted property rates will rise and commercial premiums will grow, with Korean insurers to continue increasing pricing for long-tail and health insurance. In Singapore, it predicted that price rises will be restricted by tough competition.
S&P further warned on macroeconomic factors, particularly capital market volatility, inflation, and interest rates or credit spreads over the next 12 months.
“Projected capital levels and relative operating performance will be two key determinants of insurance credit risk over the coming year,” it said.
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