Asia-Pacific tops insurance growth forecast
The Asia-Pacific region has the greatest growth potential in the insurance market over the next three years, according to an international survey by professional services firm KPMG.
Fifty eight per cent of 200 insurance company executives who responded to the survey found Asia-Pacific the most noteworthy region in terms of growth potential in the insurance market, particularly within India and China.
Entitled “Run for Cover? M&A appetite and strategy in the global insurance industry”, the survey also found the (life and non-life) insurance sector is on the “verge of a major wave of consolidation”.
Seventy one per cent of respondents expect consolidation to accelerate over the next three years in anticipation of an increasingly competitive environment, both from new entrants and as a result of customer demand.
Forty per cent said they expect to spend up to US$500 million on acquisitions in the sector over the next three years; and 6 per cent said they expect to spend more than US$3 billion.
In turn, Asia-Pacific companies are focusing more on organic growth than acquisitions, with 79 percent saying organic growth is more important to them.
Kevin Chamberlain, partner in Melbourne-based KPMG’s Transaction Services, described the survey’s findings as “particularly interesting” for insurers in Asia-Pacific.
Chamberlain said the report leaves “no ambiguity about the appetite for investment in the region”, notwithstanding there’s “clearly a difference between identifying a high potential market and being in a position to acquire or establish a presence in that market.
He made the qualification on the basis of the survey finding only 19 per cent of respondent insurance companies have made acquisitions in the Asia-Pacific region in the past three years.
“The Asia-Pacific region serves up an unusual predicament for global insurers,” he said. “On the one side, they can see the immense potential growth in the area, and on the other, there are strict foreign ownership regulations, and other barriers, to navigate.
“At present, the only permissible means of entering markets such as India or China is via joint ventures or alliances with local firms.
“However, we expect this to change in the near future as some market’s, such as India and China’s, financial services industries are liberalised,” he said.
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