Asia

Written by Joyce Chan & Rebecca Wong 

Key developments in 2024

Insurance premiums 

As the soft market continues, insurance premiums in Asia have consistently declined across all major product lines during Q1-Q3 due to increased competition and challenging economic conditions. The most prominent rate declines were observed in financial lines (including Directors and Officers insurance) and cyber insurance space, with reductions more noticeable than in 2023 given increased capacity driving market competition. In contrast, the declines in property and casualty insurance rates were comparatively more moderate.

Artificial intelligence

Last year we mentioned the growing interest among insurers in leveraging artificial intelligence to bolster claims processing, underwriting, pricing, and customer offerings. In 2024, many insurers have ramped up their investments in generative AI, embedding this technology into their distribution, operations and customer service to provide tailored solutions. Despite this, the level of "AI maturity" across the Asia insurance market remained relatively low. Insurers continue to grapple with challenges posed by a changing regulatory landscape, and data quality and processing issues. 

Cyberattacks

In 2024, Asia saw a significant rise in cyberattacks (such as data breaches, cloud outages, and critical infrastructure failures), with an average of 2,510 weekly attacks per organisation in Q2 2024, marking a 23% increase from the same period in 2023. Notably, ransomware attacks surged by 38%, accounting for 16% of all global attacks. A plethora of public and private organisations have been hit by data attacks. For example, in Hong Kong, the Union Hospital fell victim to a malicious cyberattack that compromised its computer systems and resulted in a US$10 million ransom demand. Hong Kong Cyberport, the Consumer Council and Oxfam were targeted with ransomware attacks resulting in personal data leakages. The financial sector was also heavily targeted. 

The surge in cyberattacks likely explained the 14% rise in large cyber claims in Asia during the first half of 2024. Demand for cyber insurance in Asia remained high, prompted by the need for robust cybersecurity, rate reductions and expanded coverage in the region. Many countries, such as Japan, South Korea and Singapore, have responded by tightening their data protection laws and imposing stricter data processing and breach notification requirements. Meanwhile, Malaysia has recently amended its personal data regulations to mandate breach notifications. 

What to look out for in 2025

Insolvencies and trade credit insurance

The Asia market anticipates a rise in business insolvencies in 2025, driven by sluggish economic growth, uncertain economic conditions in China (partly due to debt and liquidity crises of major property developers), and ongoing geopolitical tensions in the region. For example, Chinese property giant Evergrande was ordered to be wound up in Hong Kong after failing to restructure its massive US$300 billion debt. Country Garden is also fighting a liquidation petition with an offshore debt restructuring proposal to its creditors. The ripple effects of these insolvencies are expected to contribute to a rise in corporate bankruptcies across Asia in 2025.

Amidst growing concerns among businesses to guard against payment defaults, the Asia trade credit insurance market is poised for substantial growth, with its value projected to increase annually by 13.5% from 2024 to 2031. As a result, underwriters may see increased claims in 2025 as businesses work to mitigate potential losses stemming from corporate insolvencies. This will likely result in a surge in D&O claims, as companies and their executives face increased exposure to claims for breach of fiduciary duties and insolvent trading.

Cyber insurance

The frequency and severity of cyberattacks are escalating as financial services become increasingly digitalised. Cybercriminals now leverage AI deepfake technology and social engineering tactics to create highly realistic videos and phishing attacks for malicious purposes such as identity theft and fraud. It hit the headlines in February 2024 that the Hong Kong office of a multinational company lost US$25.6 million to a deepfake video conference call impersonating its chief financial officer.

As a result, Asia's cyber insurance market is projected to triple by 2025, also driven by increased regulatory scrutiny. Regulators, such as the Securities and Futures Commission (SFC) in Hong Kong and the Monetary Authority of Singapore (MAS), have pledged to step up their efforts to combat cyber threats and related financial crimes. For instance, the SFC has issued a circular outlining expectations for licensed entities to mitigate AI-related risks, while the MAS has established the Cyber and Technology Resilience Experts Panel to advise on emerging cyber risks in the financial sector.  Demand for cyber insurance is therefore anticipated to grow as businesses seek more robust cybersecurity measures and cover.

Climate change and catastrophe insurance

It is expected that climate change related weather events will continue, exerting claim pressure on the insurance sector. Aon reported that Asia's protection gap was substantial, with 91% of losses uninsured. As insurance claims continue to rise, some insurers are withdrawing coverage in high-risk zones, further widening the protection gap. This trend is likely to continue in 2025, putting pressure on insurers to enhance their efforts to mitigate climate risks. For instance, UN forum launched a global guide on transition plans for insurers at UN Climate Change Conference, Zurich and GoImpact partnered to help businesses in Asia to combat climate change. Also, insurance-linked securities (ILS) transactions are expected to increase, driven by investor interest and climate change implications. Taiping Reinsurance recently issued a US$35 million catastrophe bond, which is the sixth ILS issued in Hong Kong.

Digital or virtual assets insurance

The virtual assets market saw remarkable growth in 2024, driven by innovations in blockchain technology and decentralised finance (DeFi). In response, regulators have swiftly introduced new frameworks to regulate virtual asset activities and products, including imposing licensing regimes and related sanctions. For instance, the Hong Kong Treasury Bureau and Monetary Authority launched consultations on licensing stablecoin issuers and over-the-counter (OTC) trading service providers. Similarly, the MAS has consulted on regulating digital token service providers as a new class of financial institutions.

Asia's virtual asset insurance market in 2025 is poised for significant growth, as insurers are presented with significant opportunities to offer specialised coverage for digital assets, cyber risks, and operational liabilities, as well as to address regulatory exposures. They are looking to cover a wide range of risks for virtual asset service providers, including potential losses from cyber incidents such as employee fraud and loss of virtual assets, as well as third-party liabilities from claims related to intellectual property infringement, cyber incidents, fraud, scams, data breaches, and mis-selling of virtual assets. 

Explore Annual Insurance Review 2025