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Insurance Overview

The insurance sector is made up of companies that offer risk management in the form of insurance contracts and the sector has been thriving over the past decade.The insurance industry remains resilient, continuing to generate growth around the world and maintaining overall profitability despite turbulence in the global economy.

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The insurance industry is currently facing a range of challenges such as intensifying regulations, economic uncertainty and local issues in individual countries that cloud the horizon for Asia-Pacific insurance industry in the next couple years. In the first place, the extremely high expectations of consumers in the region for seamless and personalized digital experiences inspire a great deal of innovation. Firms in mainland China and other markets are experimenting widely — and delivering impressive results — with new products, new distribution models and new technology.In addition, regulators in multiple jurisdictions are increasingly focused on capital standards, consumer protection and financial reporting, thus rising regulatory costs.Moreover, rising economic uncertainty, largely due to global trade tensions slows down growth in several countries, including those that experienced the strongest recent growth, while creating new winners in global trade. What also sheds light to the problem is the low interest rates, particularly in the advanced markets, though developing ones are increasingly impacted, too. Global insurance pricing is on the rise currently according to Marsh’s latest Global Insurance Market Index.the insurance industry will likely post average combined ratios well above 100% for a few successive years. At the same time, the industry’s average return on equity (ROE) will likely fall dramatically. Generally speaking, insurers want to achieve ROE of around 10% in order to cover the cost of capital and generate ample return for shareholders. Last but not least. with profit margins significantly reduced in a hard market, it’s no surprise that new players are often very hesitant about entering the insurance industry under these conditions.

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