APAC PA&H insurance premiums to more than double in 2026

The segment is growing at an annual growth rate of 13%

ASIA PACIFIC

Personal accident and health (PA&H) insurance in Asia Pacific is predicted to grow from $203bn in 2020 to $421.9bn in 2026 in terms of written premiums according to a report by GlobalData.

The PA&H segment in Asia Pacific is growing at a compound annual growth rate (CAGR) of 13%, backed by increased awareness and growing disposable income.

According to GlobalData Senior Insurance Analyst, Deblina Mitra, the APAC PA&H insurance segment peaked at 17.8% in 2021, driven mostly by economic recovery and increased insurance awareness in the region.

“The region’s emerging markets with underdeveloped public healthcare systems struggled during the pandemic to deliver healthcare due to a surge in demand beyond their capacity, compelling individuals to seek private healthcare, driving insurance sales,” GlobalData’s Deblina said.

The report said that China is seen to be leading the PA&H insurance market in APAC, with a 69.5% share of written premiums in 2021. GlobalData identified the growing middle-income population, tax exemption, traction in remote healthcare services, and rising medical expenses as the major factors behind the growth.

“The formation of a new national pension company in 2021 to develop health insurance is expected to create substantial business for PA&H insurers

With 1 in 5 Australians experiencing mental health issues, the demand for health insurance covering mental health grew

from China’s $1.2 trillion pension sector. The PA&H insurance industry in China is expected to grow at a CAGR of 15.8% from 2020-2026,” Deblina said.

Meanwhile, Australia has a share of 8.5% of written premiums in 2021 and is the second-largest market in APAC. The PA&H insurance industry in Australia is expected to grow at a CAGR of 5.1% over 2020-2026 with the lifting of restrictions on international travel, and awareness of mental health and well-being.

“With every one in five Australians experiencing mental health issues, the demand for health insurance covering mental health witnessed growth. Psychology services and in-patient treatments/ rehabilitation are some of the mental healthcare services that are available under private health insurance,” Deblina added.

Rounding the top five markets in the region is Taiwan, India, and Japan, with a combined share of 15.4% in 2021. PA&H insurance in the three countries is expected to grow at a CAGR of 4.5%, 9.8%, and 3.3%, respectively, until 2026.

“Economic growth and pandemicled awareness coupled with the revival of the tourism sector will favor PA&H insurance’s growth over the coming years. Product innovation centering around personalisation and inclusion of mental healthcare will be focus areas for insurers,” Mitra concluded.

HOW CHINA’S INSURANCE INDUSTRY FARED IN LOCKDOWN

CHINA

Chinese life insurers continue to have muted growth in April of this year, a trend that continued in the month before according to a Jefferies report.

China’s major insurers saw drops in life premium growth with just a few showing a slight increase.

The report said that the weakness in April was widely anticipated given the developments in COVID-19 infections and the strict lockdown protocols in Shanghai. However, the fact that growth in April did not deteriorate further from its results in March showed efforts by life insurers in channel diversification started to pay off.

“The Shanghai lockdown will ease starting from this week, although zeroCovid remains the authorities’ primary pandemic control strategy. Lifers are pushing savings/annuity products as well as whole life insurance. We expect premium/Value of New Business growth to improve year-on-year in H2 thanks to a lower base and government stimulus on the macro economy,” Jefferies said.

Meanwhile, property and casualty (P&C) insurers have maintained solid growth, with Jefferies anticipating strong underwriting profit in 2022 because of reduced vehicle traffic amidst lockdowns.

Inflexion point

Jefferies pointed out that the major reason for Chinese insurers’ sluggish Q1 results was mainly because of weakness in investment performance as the Chinese insurance industry remains massively underweighted by investors.

“China insurance remains massively underweighted by investors. Most investors we spoke to agree valuations are attractive but would like to wait for better clarity on Covid/market directions,” Jefferies said.

The report predicts that P&C will likely see lower auto losses in Q2, whilst life insurance players will have to deal with the impact of COVID-19 and a volatile investment market.