Double-digit growth forecast for APAC liability insurance

The liability insurance industry in the Asia-Pacific (APAC) region is projected to grow from $39.4bn in 2023 to $61.7bn in 2027, in terms of written premiums, according to GlobalData.

The sector is expected to grow at a compound annual growth rate (CAGR) of 11.8% over 2023-2027, supported by economic growth in the top markets and improved product offerings. GlobalData noted that liability insurance in APAC is concentrated among the top three markets China, Australia, and Japan, which are estimated to account for nearly 87% of the market.

Prasanth Katam, insurance analyst at GlobalData, said: “APAC liability insurance growth is expected to outpace the global growth over 2023-27, driven by prudential underwriting practices, new regulatory developments, and digitalisation that have increased the demand for cyber insurance.”

China is expected to emerge as the largest contributor to overall APAC liability insurance growth, said GlobalData. It already accounts for an estimated 48% of the liability market in APAC. Global Data said the reopening of the Chinese economy after the pandemic is expected to drive greater demand for liability insurance from the SME sector. As a result, China’s liability insurance premiums are expected to grow at a CAGR of 14.5% over 2023-27.

In Australia, which has an estimated market share of nearly 20%, premiums are forecast to grow at a CAGR of 11.3% over 2023-27, supported by workers’ compensation and professional/ management liability insurance, which is expected to benefit from the expansion of business from Lloyd’s syndicate. A stable premium increase, additional capacity, and improved underwriting conditions for incumbents in 2023 will support liability insurance growth over the next five years.

For instance, Australia-based Allstate Underwriting Agency, part of the Envest Group, secured support from Lloyd’s in June 2023 to expand its capacity in the Australian market. With support from Lloyd’s and Germany-based HDI Global Specialty, Allstate is underwriting and distributing farm package products, incorporating cover for liability, among others, said GlobalData.

Liability insurance written premiums in Japan, which accounts for nearly 19% of the market,  are expected to grow at a CAGR of 6.8% over 2023-27, driven by an increase in economic activities and digitalisation that has increased the exposure to cyberattacks, said GlobalData.

“Apart from offering cyber insurance products, insurers in Japan are expanding their consultation services, such as providing drills to combat email cyberattacks. Insurers are also providing cyber insurance to cover Internet of Things (IoT) devices used in the commercial sector. Cyber insurance products covering reputational losses from social media exposure are expected to gain traction over the coming years,” said the analytics firm.

Katam said: “Industrial pollution linked to per- and poly-fluoroalkyl substances is expected to be another focus area for Japanese liability insurers over the next few years.”

Hong Kong, the fourth-largest market in the APAC region, with a market share of 4.3% in 2023, is expected to see its liability written premiums grow at a CAGR of 6.6% over 2023-27, while Singapore, the fifth-largest market, with a market share of 1.7% in 2023, is expected to see its liability written premiums grow at a CAGR of 7.3% over 2023-27.

“An improved economy, digitalisation, and growing awareness of the importance of risk management by businesses and individuals are expected to support the demand for liability insurance in the APAC region over the next five years,” said Katam.