Claims can remain unresolved for 4 to 8 years and sometimes 20 years or longer.
Asia’s casualty insurance market has room to expand as insurance penetration remains low, but insurers face rising claims costs, long settlement periods, and emerging liability risks, according to Marsh Re.
Casualty gross written premium (GWP) averages about 0.1% of GDP across Asia, compared with about 0.5% in the US.
China accounts for about $19.8b in casualty premiums, or roughly 70% of Asia’s total, Marsh Re said in a September report.
The report, which excludes motor insurance, groups casualty business into general liability, workers’ compensation or employers’ liability, and financial lines.
Demand for general liability cover is growing alongside manufacturing, construction, logistics, consumer goods, and technology.
Marsh Re also sees opportunities in financial lines as companies face greater regulatory and governance requirements and more cross-border investment.
Loss ratios across Asia are generally below 55%, except in South Korea and India, where they exceed 60%.
However, casualty claims can take four to eight years to settle, and in some cases 20 years or longer.
This makes it harder for insurers to determine the final cost of claims and set appropriate reserves, particularly when inflation and other loss trends are changing.
Claims frequency in Asia is generally stable or rising slightly, but the cost of individual claims is increasing.
Higher labour, material, and medical costs are contributing to the trend, whilst geopolitical and economic uncertainty is adding pressure.
Marsh Re said Asia has so far seen limited evidence of the sharp rise in litigation costs found in the US.
However, Asian companies with operations, exports, directors and officers exposure, or products sold in the US can still face larger settlements and jury awards.
Insurers in Asia are also beginning to see claims costs rise faster than general inflation in some cases.
At the same time, general liability and financial lines insurance rates have continued to decline across much of Asia because of strong capacity and competition amongst insurers. Some insurers are placing greater focus on pricing discipline for businesses with US exposure or more complex liability risks.
Large casualty losses remain a concern. Past Asian-related product liability cases involving Takata airbags, Samsung phone batteries, and Takeda’s Actos diabetes drug each resulted in claims exceeding $1b.
Industrial accidents, transport incidents, environmental damage, and corporate governance failures can also lead to large claims.
Emerging risks include artificial intelligence, electric vehicle batteries, PFAS contamination, climate-related liability, cyber-physical risks, and microplastics.
Marsh Re said casualty catastrophe models are still less developed than property catastrophe models, although its Vista platform now covers more than 300 scenarios.