The Asia Pacific insurance market has significant growth potential, supported by a population of over four billion and economic growth potential.

While emerging markets have lower insurance density and penetration compared with developed markets, they are expected to see higher growth rate across the next two years. Contributing factors include higher GDP growth, increasing risk awareness and the accelerate digitalisation of distribution channels that has increased accessibility to insurance products.

Life insurance markets are more concentrated than non-life, with the top five players in Asia Pacific sharing over 50% of the market, based on KPMG analysis. 

Developed Asia Pacific markets are dominated by domestic players, except for Hong Kong (SAR) and Singapore where international players tend to set up regional headquarters and outperform local insurers on a smaller scale. The inverse holds true for emerging Asia Pacific markets, which are dominated mostly by international players. Non-life markets are generally more fragmented than life, except for Japan, Chinese Mainland and South Korea.

Both developed and emerging markets in the region are dominated by domestic players, with the exception of Singapore, Malaysia and Hong Kong (SAR), China.

The COVID-19 pandemic and regulatory changes are leading to an ongoing shift towards protection products, such as death, retirement and medical protection. The pandemic has also raised awareness of the benefits of health insurance, especially in emerging Asia Pacific amid rising medical inflation and health penetration.

There is an increasing need for health insurers to close the medical coverage gap, as health products gain market share across Asia Pacific markets. The increasing awareness presents a significant growth opportunity for the life insurance industry.

Building an insurance ecosystem has become a key focus, with insurers viewing it as a potential growth driver and an effective means to retain customers. This has driven up partnerships and M&A as incumbent insurers seek to leverage the capabilities developed by insurtech and the broad customer base of platform players.

Traditional channels such as bancassurance and agency remain dominant, but insurers are increasingly turning to digital distribution channels with face-to-face selling impacted by social distancing measures during the pandemic.

In Singapore, life products are mainly distributed through agents, bancassurance and financial advisors. Direct online channels also grew rapidly during the pandemic.

Most Asia Pacific markets (notably Chinese Mainland and India) have relaxed their foreign ownership restrictions in recent years, with six of seven emerging markets allowing foreign ownership and control in domestic insurers.

Relaxation of such restrictions presents opportunities for international insurers to increase stakes in key markets.

The rules and regulations for insurers in Asia Pacific are evolving. Despite varying levels of progress across different countries, the regulatory changes have largely focused on policyholder protection, capital preservation and insurtech promotion. 

Download our full report to read about regulatory changes in Singapore.