201303AsiaInsuranceMarketReport en

Marsh Risk Management Research
Market Perspective
Asia
Insurance Market Report 2013
MARCH 2013
Contents
Foreword 1
Executive Summary
Insurance Markets by Country

China..............................................5
Korea...............................................9
Taiwan...........................................12
Hong Kong......................................6
Malaysia..........................................9
Thailand........................................12
Indonesia........................................7
Philippines....................................10
Vietnam.........................................13
Japan...............................................8
Singapore......................................11
Insurance Markets by Specialty and Industry

Aviation.........................................17
Power and Utilities ........................22
Employee Health and Benefits.......18

Marine Hull....................................20
Technology and
Telecommunications.....................23
Mining...........................................21
Trade Credit ..................................24
Political Risk and Structured

Credit ...........................................25
Warranty and Indemnity
Insurance......................................26
Foreword
Following the extremely destructive natural
catastrophes of 2011, the past year has been relatively
benign with few major events. Despite an active
typhoon season, including one of the most powerful
typhoons on record for the Philippines, insured losses
have been minimal.
The regional insurance markets quickly recovered after
the double hit from the Japan earthquake and tsunami
disaster, and the floods in Thailand. Capital, capacity,
and, more importantly, competition continued to
flow into the region as demand for insurance and the
growth aspirations of insurers remained unabated.
These conditions continue to benefit insurance buyers,
who have enjoyed a prolonged period of low rates
over the past decade.
With respect to buying styles and trends, clients across
the region continue to become more sophisticated.
There is an increased awareness around risk
management and demand for technical services is
on the rise. Heavy industry sectors, such as oil and
gas, power and utilities, and mining, are utilising risk
engineering services regularly, partly driven by insurer
requirements, but also by a proactive approach to
risk management.
Within the financial lines arena, 2012 proved that
Asia is not immune to the litigation culture that has
been so pervasive in the West for so long. Regulators
across the region have introduced a significant
amount of new legislation, increasing their oversight
and ability to take action against corporations and
directors more frequently.
The issue of data privacy and cyber liability has quickly
become a hot topic both in company boardrooms and
regulatory agencies in Asia. New legislation is being
introduced in many Asian countries. In Singapore,
for example, the Personal Data Protection Bill and
the Data Privacy Commission will be implemented
later this year, bringing a new level of regulation
and potential financial liabilities for companies
operating there.
The need for infrastructure investment across the

region continues to be a constant theme. However,
the lending environment has shifted dramatically, as
the historically active European banks reduce their
project finance activities. New players are emerging,
shifting the lending environment and creating new
challenges for project sponsors. Development banks,
state-backed infrastructure funds, and other public
entities are entering the picture, increasingly as a lead
partner rather than simply a loan syndicate participant
or guarantor.
Risk and insurance has taken on an even greater
importance in getting infrastructure project financing
over the line. Now more than ever, project sponsors
must go to great lengths to differentiate their approach
to risk management and provide certainty around
the projects bankability. Project sponsors also
must adopt a different engagement strategy to deal
with development banks, as they are very different
organisations when compared with traditional
commercial banks.
Heading into 2013, the insurance landscape will
continue to benefit buyers. Capital, capacity, and
competition will continue to flow into the region as
growth opportunities remain abundant.
As long as the frequency and severity of natural
catastrophes remains benign, generally speaking the
rates will continue to remain stable with potential
reductions available especially for insureds with
well-managed risks and that have not suffered from
an adverse claims history either directly or within
their industry.
Martin South
CEO, Asia-Pacific
Marsh, Inc.
Marsh 1
Executive Summary
Asia is a complex region, with markets
that range from extremely mature
to just emerging.
A countrys maturity affects the understanding of
risk management and take-up of insurance, with a
significant variance across the region. However, the
rate environment generally shows similar qualities
from market to market, with some minor differences in
particular classes of insurance.
Costly Employees Comp

Employees compensation costs continue to soar
in Hong Kong as the market continues to be
very challenging.
Employers costs for this compulsory insurance
continue to increase significantly year on year by
between 20% and 30%, and many underwriters have
withdrawn from this unprofitable class of business.
These trends are unlikely to abate in 2013, increasing
the need for employers to completely reassess how
they manage workplace injury claims.
Non-CAT Rates Stay Low

Chinas non-catastrophe-exposed property
insurance rates remain extremely competitive,
well insulated from any regional dynamics given
strong local capacity.
Singapore continues to enjoy extremely low property
insurance rates, with 10% reductions on top of
already low rates, driven by ample capacity and
fierce competition.
Hong Kong experienced rate reductions of up to
10%, driven by similar dynamics to Singapore,
including capacity and competition.
Rates In Catastrophe-Stricken
Areas Remain Elevated
Thailand flood coverage on property insurance
policies continues to be severely restricted; rates
have increased by around 20%, and in some cases, by
more than 300%.
D&O Rates Stable For Us

Exposures
In China, rates for risks with US exposures have
remained flat or decreased by less than 5%. For risks
without US exposures, rates have decreased in the
order of 5% to 10%.
In Hong Kong, rate reductions were limited for
multinational companies with US exposures.
In Taiwan, capacity for D&O liability has been
reduced due to increased losses. Rates are expected
to remain stable or slightly increase in 2013.
D&O rates remain high for US-listed clients with
operations in China. These same clients with
claims or investigation exposures will be subject to
increased scrutiny from insurers.
Other Financial Lines STABLE
Japan earthquake rates remain around 30% to

50% higher than they were prior to the Tohoku
earthquake event.
China professional liability rates remain stable, with

ample capacity for most traditional professions
and service providers.
In the Philippines, natural catastrophe perils are

regulated by tariffs, with a minimum of 0.15% for
earthquake, typhoon, and flood.
As professional indemnity is becoming a standard

requirement for directors in the Philippines, demand
for this cover is increasing.
In Hong Kong, rates for professional liability
remained stable in 2012, with reductions of up to 5%
common.
In Singapore, rates stabilised, with many companies
experiencing 5% reductions from existing rates.
2 Insurance Market Report 2013
Insurance Markets by
Country
China
General Liability
Rates: Decrease 0% to 10%
General liability insurance rates remained stable, with a slight
decrease of about 5%. This trend is expected to continue in 2013.
Motor
Rates: Stable -5% to +5%
During 2013, as de-tariffing is adopted in several cities, including
Shenzhen, motor insurance rates are expected to decrease.
Workers Compensation
Workers compensation rates remained stable, with a slight decrease
of about 5%. This trend is expected to continue in 2013.
Property
The general rate increases triggered across the region by the
catastrophes in 2011 did not affect the Chinese market. Property
insurance rates remained stable, with a slight decline of about 5%
in the fourth quarter. Rate increases are not expected in 2013, while
renewals for insureds with a favourable loss record may attract rate
reductions in the order of 5% to 10%.
Environmental
Rates: N/A
As a relatively new product in China, environmental liability insurance
is offered by only a few insurers, with no reinsurance treaty capacity
in the local market.
Directors and Officers (D&O)

Rates for risks with US exposures remained flat or decreased by less
than 5%. For risks without US exposures, rates decreased in the order
of 5% to 10%. No significant change is expected in 2013.
Financial Institutions
Rates stabilised and many companies experienced reductions
of up to 5%. No change is expected in 2013.
Professional Liability
Rates stabilised, with many companies experiencing 5% reductions
from existing rates. No change is expected in 2013.
Marine Cargo
During the fourth quarter of 2012, rates decreased by around 10%.
With plenty of capacity available, the cargo insurance market is very
soft and is expected to remain soft in 2013.
Employee Health and Benefits

Rates: Increase 0% to 10%
For high-end medical insurance, rate increases between 5% and 7%
were common across China, with a wider range of 3% to 10% for local
supplementary medical insurance.
Risk Trends
Stable Property Insurance Market
The Chinese property insurance market did not
experience the general rate increases that affected the
rest of the Asia region, triggered by the catastrophes of
2011. Rates remained stable or showed a slight decline.
Return Of High D&O Rates

In China, rates for risks with US exposures have
remained flat in general. But rates are going higher
for the companies that listed in the US via a reverse
take-over and those with reported claims.
Medical Insurance Rates

As Chinese insurers focus heavily on delivering
service-quality improvements, product innovation,
and customer satisfaction for high-end medical
insurance, more reasonably priced premiums are
expected to follow.
Contact:
Steve Lundin
Head of China
+86 10 6533 4000
steve.lundin@marsh.com
Medical Malpractice
During the fourth quarter of 2012, rates decreased by about 5% due
to a favourable claims environment and ample capacity. During 2013,
reductions of 5% to 10% are expected.
Marsh 5
Hong Kong
General Liability
This market remains competitive for favourable risks, but rates are
likely to increase for those with a history of high claims.
Motor
The motor insurance market was stable during 2012 and is expected to
remain so in 2013.
An ongoing deterioration in claims experience has seen employees
compensation insurance rates continue to increase by between
20% and 30%.
Property
Hong Kongs property insurance market remains fiercely competitive
with ample capacity. Rates decreased during 2012 by roughly 10% and
this trend is likely to continue into 2013.

The D&O market showed signs of firming during 2012, despite
continued strong competition. Rate reductions were limited for
multinational companies with US exposures.
During the fourth quarter of 2012, rates remained generally stable,
with some reductions of up to 5% for favourable risks. However, fund
managers experienced significant rate reductions as assets under
management decreased due to redemptions by customers. Claims
were relatively benign and capacity was unchanged. New regulations
relating to breaches around price-sensitive disclosures will increase
exposure for this segment.
Rates remained stable in 2012, with reductions of up to 5% common.
Cyber liability is still a new class of insurance and has been slow to
take hold despite some high-profile data privacy breaches and cyber
attacks. An increase in project professional indemnity is expected as
more contracts are awarded from the public and private sectors.
Medical Malpractice
During 2012, rates increased by 10% to 20% due to a high volume
of claims. This is expected to remain a difficult class of insurance
moving into 2013.
Marine Cargo
Cargo insurance rates remained soft throughout 2012 mainly due
to increased market capacity and a decrease in trade and shipment
volumes. Rate reductions of 10% to 15% (or higher) were common for
insureds with meaningful revenue and good overall loss ratios. Some
more aggressive underwriters may offer even higher reductions. Rates
are expected to continue to remain soft in 2013.
Employee Health and Benefits (Group Risks)

Medical insurance remains the primary class of benefits provisions,
with approximately 1.6 million of insured members in Hong Kong.
Double-digit medical inflation is expected to continue. Premium
increases upon renewal exceeding 20% are not uncommon. Due
to the increase in health awareness, rising incidents of serious
diseases, and an ageing population, there is a demand for voluntary
top-up medical covers and options. The group life market remained
competitive and no clear trend in rate increases has been identified.
Demand for group critical illness has risen, with disability income
remaining the least popular.
Risk Trends
Slowing Economy
The Hong Kong economy has slowed, leading to
low take-up rates for new insurance coverage such
as cyber insurance. It has also led to delays in major
construction projects and a slowdown in financial
transactions such as mergers and acquisitions and
initial public offerings.
Soaring Employees Comp Premiums

Employers costs for this compulsory insurance
continue to increase significantly year on year by
between 20% and 30%, and many underwriters have
withdrawn from this unprofitable class of business.
These trends are unlikely to abate in 2013, increasing
the need for employers to reassess how they manage
workplace injury claims.
Personal Liability Exposure for

Directors
New regulations, effective January 2013, will
increase personal liability exposure for directors. A
significant volume of claims activity relating to Hong
Kong Securities and Futures Commission (SFC)
investigations is putting further pressure on rate
reductions. This trend is expected to continue in 2013
as regulatory activity increases.
Contact:
David Jacob
Chief Executive Officer
+852 2301 7288
david.jacob@marsh.com
Indonesia
General Liability
Insurers may expect strong demand to reduce premiums for 2013
renewals, reflecting reduced sales and capital expenditure as the
economy slows in 2013.
Motor
The motor market is predicted to remain stable and competitive, with
the exception of medium-to-heavy industry fleet (trucks, trailers), a
segment in which pricing may increase slightly due to unfavourable
claims in 2012.
Workers compensation is not mandatory; demand is growing,
however, particularly in the oil and gas sector. Rates have remained
healthy as competition among insurers is not as fierce as in other lines,
providing room for rate reductions upon renewal.
Property
For small and midsize businesses, the markets are expected to remain
competitive. For large and complex risks with significant catastrophic
exposure, rates are expected to increase by 5% to 10%. This increase is
likely to be higher for those risks with unfavourable claims records or
in high-risk sectors such as energy.
Environmental
Demand for environmental liability insurance is increasing, albeit off
a small base, as the government imposes mandatory regulations on
companies engaged in the management and handling of hazardous
waste. Pricing is expected to remain stable.

Competition among insurers, coupled with relatively favourable loss
ratios, has kept rates competitive, with insurers offering favourable
terms with wider coverage and improved deductibles.
As market penetration remains limited, some insurers are offering very
competitive premiums to attract and grow business in certain product
lines, including professional liability.
Insurers have adhered to very strict underwriting disciplines,
particularly for certain sectors such as engineering contractors,
medical practitioners, and law firms. This discipline is expected to
continue in 2013.
Medical Malpractice
Marine Cargo
Indonesias production of goods and services is expected to grow
through 2015, with raw materials, semi-finished goods, and finished
goods flowing in, out, and within the country. Consumer prices are
expected to increase by 16%, and the turnover volume of the marine
cargo insurance market is expected to grow by 10% to 16% in 2013.

With annual medical cost inflation of 11% to 15% and unfavourable
insurance loss ratios, rate increases of 10% to 20% are expected
in 2013. Increases are likely to be higher for insureds with loss
ratios above 100%. Competition driven by availability of insurance
capacity in the market is not expected to help ease price increases,
but will provide customers with additional coverage extensions to
their programs.
Risk Trends
Cost Of Catastrophe Risk
International reinsurance capacity remains a dominant
factor in Indonesias domestic insurance market. A
number of reinsurers have ceased writing proportional
reinsurance in favour of excess of loss and continue
to adhere strictly to charging appropriate pricing to
reflect the cost of natural catastrophe risks. These
factors are translating into higher reinsurance costs
for local insurers, with many reporting increases at
renewals of around 10% to 15%, along with reduced
capacity. These higher costs are being passed on as
higher premiums for insureds.
Property and Fire Insurance Pricing

Indonesias new independent regulatory and
supervisory body, the Financial Services Authority
(Otoritas Jasa Keuangan), plans to establish a
referenced tariff for property and fire insurance.
This tariff is expected to lessen the intensity of price
discounting among insurers and ensure more rational
pricing, which in turn is expected to translate into
price increases for customers.
Weakening Country Risk Ratings

Insurers country risk ratings for Indonesia may
deteriorate as the government deals with escalating
labour protests relating to minimum wages and moves
toward the 2014 presidential election. This may result
in restrictions on property coverage related to strike,
riot, and civil commotion being applied to general
industries, especially those that are labour intensive.
A similar impact may be expected for employment
practice liability insurance, although this market
remains small.
Volume has been very limited, with few insurers offering this line
of business. However, this trend may change as legislative and
regulatory factors develop.
Marsh 7
Contact:
Jacob Kosasih
+62 21 5790 0110
jacob.kosasih@marsh.com
Japan
General Liability
Capacity has remained stable, with manufacturing errors and
omissions and products recall covers readily available with some
sublimits. Both Japanese and international insurers began to develop
liability insurance for cyber risks.
Motor
The personal line motor (non-fleet) discount table will change in
October 2013. Owned damage natural catastrophe cover is not readily
available following the Tohoku earthquake.
Rates remain stable. Due to the March 2011 earthquake, natural
disaster cover for workers compensation has not been available.
Property: Catastrophe (CAT) Exposed

Property: Non-CAT Exposed
Earthquake rates remain around 30% to 50% higher than they were
prior to the Tohoku earthquake event. Given renewals had already
experienced a large premium rise immediately following the event
in March 2011, no further large price increases were observed
during 2012.
Environmental
The market remains stable.

There are signs that the soft insurance market for D&O may be
coming to an end. During 2012, rates remained stable. However,
insurers showed signs of tightening terms and stabilising rates as
claims volume increased.
The market for financial institutions is still limited, with little market
competition. Insurers focus has been on maintaining long-term
capacity at relatively stable prices. International participants continue
to lead the market. These trends are expected to continue in 2013.
Despite new insurers entering the market, competition is still very
limited and this is reflected in stable premium rates. International
participants continue to lead the market. These trends are expected to
continue in 2013.
Marine Cargo
Despite large market losses caused by events such as the Tohoku
earthquake and Thailand floods, which affected Japanese markets in
2012, the marine cargo market has been stable. Japanese insurers
continued to dominate marine.

Health costs are shifting from the government to the private sector.
The workforce is ageing, driving health care costs and demand for
flexibility. The long-term disability insurance market is growing rapidly,
reflecting increasing levels of mental health issues.
Risk Trends
Earthquake Exposures
Overall rates for all lines of insurance have remained
relatively stable, with the exception of earthquake
rates. Earthquake rates continue to be around 30% to
50% higher than they were prior to the 2011 Tohoku
event.
Growth of Market
Net written premiums increased during 2012, largely
driven by premium increases in the auto insurance
market. However, subdued investment returns and the
two notable loss events contributed to two of the mega
insurer groups reporting financial losses in the first
half of 2012.
Contact:
Hirofumi Shimoyama
Country Manager
+81 35 334 8207
hirofumi.shimoyama@marsh.com
Korea
General Liability
Rates were stable during 2012 and are expected to remain so in 2013.
Motor
Due to the increased foreign motor market share in Korea and higher
vehicle values, higher collision liability limits are recommended. This
additional limit has a relatively minor impact on premiums.
This program is overseen by government and no significant change is
expected in this segment.
Property
One insurer introduced a middle-market product for the total sum
insured between US$5 million and US$100 million. The rate is
competitive but only available in Korean policies.

Due to excellent loss ratios, D&O rates in Korea remain soft despite low
premium levels relative to the global market.
No significant change is expected in this segment.
Medical Malpractice
Marine Cargo
A slow economy coupled with abundant capacity has kept the marine
cargo market soft. No market change is expected in 2013.

Implementation of co-payments to improve loss ratios has showed
positive results and kept rates stable. More co-payment options are
expected to be introduced in the market in 2013.
Risk Trends
Personal Information Protection Act
The newly enacted Personal Information Protection
Act requires significant changes to the way companies
collect, keep, and transfer personal information.
These operational changes are expected to affect
personal lines of insurance, particularly for those

companies that do not respond adequately to the
new requirements.
Strong Domestic Retention

Retention among local insurers continues to increase.
As this trend is expected to continue, it would be
prudent for companies to review placement strategies.
Contact:
Sang H. Rhi
+82 2 2095 4777
sang.h.rhi@marsh.com
Malaysia
General Liability
For insureds with no losses, rates remained flat or marginally
increased. In contrast, insureds with losses have witnessed
significant rate increases.
Motor
This is a tariff market. The regulator has announced a gradual rate
increase for 2013 but the details have yet to be released.
This coverage line is not prevalent in Malaysia as there is a state-run
social security program.
Property
For insureds with no major losses, the rates remained stable. For
insureds with large losses, rates and deductibles were increased
substantially. This is expected to remain the case in 2013.
Environmental
Demand is not strong for environmental liability products and there
were few significant losses. A number of underwriters have expressed
interest in growing this market segment.

Rates have been historically low and despite some claims activities,
rates have remained stable.
Most financial institutions have experienced some form of loss in 2012.
This has caused rates to increase marginally.
Marsh 9
There are no significant changes in this segment.
Medical Malpractice
There have been some marginal increases for this class of insurance
during 2012. This is expected to continue in 2013.
Marine Cargo
Increased competition and market capacity have resulted in rate
decreases despite adverse claims experience.

Medical Inflation of about 15% continued to push medical premiums
in 2012 with surge in medical premiums averaging between
7% and 10%. One insurer now dominates with a more than 60%
market share of employee benefits policies in Malaysia.
Risk Trends
Firming Market
Malaysias insurance market firmed during
2012 following the previous years catastrophe
losses regionally.
Reduced Capacity
One insurer recently announced it will cease offering auto insurance

locally. The Philippine Insurance Commission has authorised a 50%
across-the-board increase in the tariff premiums for Motor Vehicle
Voluntary Third Party Liability Bodily Injury on policies issued or
renewed effective from 1 January 2013.
Rates: N/A
Workers compensation and employers liability are mandatory
insurances for both private sector and government employees. These
classes are provided exclusively by government agencies, to the
exclusion of private sector insurers.

Natural catastrophe perils are regulated by tariffs, with a minimum
of 0.15% for earthquake, typhoon, and flood. Insurers renewing their
treaties on 1 January 2013 have indicated the effect of Superstorm
Sandy will be felt in the renewals of the first quarter of 2013.
Environmental
Rates: N/A
While sudden and accidental pollution cover is available locally, full
environmental impairment liability insurance is not.

The growing number of regional insurers offering D&O liability
insurance in the Philippines is keeping premiums stable.
Capacity in the market decreased due to consolidation

among industry participants. Underwriters have
been heavily focused on risk management and the
implementation of risk engineering.
Local markets remain restrictive towards financial institutions.
Contact:
As professional indemnity is becoming a standard requirement for

directors in the Philippines, demand for this cover is increasing.
CB Lim
+60 32 161 3455
cb.lim@marsh.com
Philippines
General Liability
Capacity is expected to remain available, given the non-litigious
nature of the Philippines relative to markets such as the US.
Motor
Local auto rates are on a downward trend generally, but each premium
continues to be determined on a case-by-case loss history basis.
Motor fleet business has experienced a combination of high frequency
and severity losses due to poor motoring conditions in the country.
Marine Cargo
Rates have fluctuated due to individual insureds loss profiles.
Cargo delay in start-up cover is increasingly difficult to place in the
local market.

Rates: N/A
Health insurance remains a key business initiative for 2013 as
the Philippines ageing index (proportion of people 60 years old
and over per 100 people under the age of 15 years) continues to
increase (20.3% in 2010 from 16.1% in 2000). A combination of
medical inflation, utilization, and cost of medical services is driving
medical cost. The annual medical cost inflation is between 8% and
10%, and the expected rise in medical premiums is 10% to 12%.
Companies are looking at cost containment measures and effective
benefits programs that have a cost-optimisation element in order to
continue sustainability.
Risk Trends
Construction Risks
The significant investment in infrastructure and
power generation industries in the Philippines, with a
particular focus on renewable energy such as biofuels
and wind turbines, has seen a substantial increase
in construction risks. Given the high level of foreign
and domestic funding required for these projects, the
full range of insurance protection is being sought,
including covers such as delay in start-up/advance
loss of profits.
Contracting Capacity
Capacity is contracting, especially for property
with exposure to natural catastrophes, and rates
continue to increase in response to the 2011 natural
catastrophe losses.
Expanding Risk Portfolios

Many companies are increasingly seeking nontraditional financial risks coverages such as
trade credit, D&O liability, and professional
liability insurance.
Contact:
Ramon Zandueta
+632 751 1067
ramon.zandueta@marsh.com

Rates, which were already low, decreased up to 10% during 2012 and
are expected to fall further in 2013.

D&O insurers continue to offer wide coverage and competitive
premiums. New capacity is expected to add to competitive
market pressures. Buyers of D&O are placing greater scrutiny on
understanding the policy triggers specific to criminal proceedings
involving fraud and dishonesty. Discussions with multinational
or global D&O insureds on compliance with overseas admitted
requirements are on the rise.
The financial institutions market in Singapore remains competitive,
with ample capacity from insurers. Claims experience remains
favourable, with the exception of employee infidelity for banks.
Professional liability claims are still not common. Underwriting
expertise is growing, resulting in enhanced policy wording
and coverage.
Professional liability remains stable, with ample capacity for most
traditional professions and service providers. New demand is largely
driven by contractual requirements, for example, in the life sciences
and technology industry segments. A gap remains in the underwriters
acceptance of the risk exposures endemic to these segments.
Medical Malpractice
Despite losses affecting the private sector, the overall experience
remains favourable with stable rates. This trend is expected to
continue into 2013.
Singapore
General Liability
There were very few major losses in Singapore during the year.
Motor
After many years of losses, the local motor market is showing signs of
stabilising due to the improving loss experience.
Although the loss experience has not deteriorated, most insurers
are increasing rates in anticipation of the expected increase in
statutory compensation benefits under the work injury legislation set
to be introduced.
Marine Cargo
Loss experience remains favourable, keeping rates competitive.

The market remains stable.
Risk Trends
Broker Competition
Government-related businesses and agencies are
increasingly conscious of the procurement of
insurance products and services and are enforcing
tender processes for the selection of brokers and
products. This has resulted in fierce competition
between competing brokers.
Marsh 11
Property Insurance Rates

With no major losses in Singapore, the market for
property insurance remains competitive with ample
capacity. Rates, which were already low, decreased
further up to 10% during 2012. Despite
significant capacity, new insurers continue to enter the
market. These trends are expected to continue in 2013.
Professional Liability Insurance

With the rise of high-end, value-added manufacturing
services in Singapore, particularly in the life sciences
and technology industries, clients are increasingly
seeking some form of errors and omissions insurance
to satisfy their contractual requirements. However, a
large gap remains in the underwriters understanding
and acceptance of the risk exposures endemic
to these segments.
The financial institutions market has softened due to good loss ratios
and ample capacity. These conditions are expected to continue
into 2013.
Conditions are expected be flat in 2013.
Marine Cargo
A soft market is expected in 2013 for policies with good loss ratios.

Employee benefit insurance premiums increased slightly in 2012
due to medical cost inflation. The premium cost of National Health
InsuranceII (NHIII) and labor insurance will increase in 2013 due to
NHIII reforms.
Contact:
Alan Cheah
+65 6922 8388
alan.cheah@marsh.com
Taiwan
General Liability
General liability rates declined slightly during 2012. However, for
companies seeking higher limits or broader cover, or for those with
a poor loss ratio, rates increased in excess of 10%. Similar market
conditions are expected in 2013.
Motor
Due to a poor loss ratio in 2011, optional third-party liability rates
increased during 2012, a trend that is expected to continue in 2013.
Rates were stable in 2012 and are expected to remain stable in 2013.

Rates: Increase >30%
Rates for natural catastrophe property cover are based on tariffs, while
non-catastrophe covers are free rate. A stable price is expected in 2013
due to the new catastrophe tariff model used since July 2011.

Capacity for D&O liability has decreased due to increased losses. Rates
are expected to remain stable or increase slightly in 2013.
Risk Trends
Commercial Property Damage
Insurance
Commercial property damage written premium has
grown by about 20% since July 2011 following the
implementation of a new catastrophe tariff model.
Contact:
Edwin Shih
+88 6 2 2518 9998
edwin.shih@marsh.com
Thailand
General Liability
The casualty classes of insurance have remained stable, with no
significant movement in rates.
Motor
Motor insurance premiums are expected to increase, reflecting the
increase in repair costs for motor vehicles.
Workers compensation is mandatory and managed through a
government program.

Rates: Increase >30%
creating opportunities for all major business

sectors. Thailand plans to play a major role in the
ASEAN Economic Community.

Capacity has shrunk for natural catastrophe exposures, particularly for
flood cover, with underwriters either reducing sublimits or ceasing to
write flood cover. Premiums continue to increase substantially.

Contact:
Duncan Buchanan
+66 2 695 7103
duncan.buchanan@marsh.com
Insurers are offering enhanced D&O coverage, with the expectation

that prices will stabilise.
Rates: Increasing 0% to 10%
Rates for financial institutions have reflected risk profiles. Those
risks displaying adverse developments have incurred significant rate
increases.
Demand for professional indemnity is increasing, in particular for
single project professional indemnity insurance. Capacity remains very
limited, although it is likely more capacity will become available as
more underwriters offer products.
Marine Cargo
Marine cargo premiums have remained stable.

Competition remains strong, with price discounting evident,
particularly on group medical insurance. Underinsurance is common,
given many benefits are tied to the market median. Annual inflation
on medical costs is reflected in increasing claims ratios. To ensure
sustainable pricing, rates have increased 20% to 30%.
Risk Trends
Flood Cover Restrictions
In response to the 2011 floods, flood coverage on
property insurance policies continues to be severely
restricted, while rates have increased by around 20%
and, in some cases, by more than 300%.
Reinsurance Rates
Reinsurance market treaty renewals are currently
being negotiated and natural catastrophe exposures
will again be closely reviewed. Rates are expected to
remain at post-flood levels, with some discounting
where clients have taken strong measures to mitigate
flood exposure. The casualty market should remain
fairly stable.
Infrastructure Investment
Government investment in infrastructure is expected
to increase substantially during 2013 and beyond,
Vietnam
General Liability
Liability insurance can encounter wide premium swings dependent
on the risk appetite and claim experience from one carrier to another.
For companies with a good loss history, a 5% to 10% rate reduction
can be expected, although the decision to insure with a carrier should
not be based on premiums alone. As liability losses and claims can be
complex, the carriers experience and capability to support a claim
are also important elements to consider when making placement
decisions. Looking ahead, rates are expected to vary widely between
carriers; renewal rates will remain stable with a slight reduction
anticipated.
Motor
Motor vehicle is a major class of insurance that represents more than
30% of the insurance industrys premium pool. While coverage is
standardised by market practices and rates are competitive, there will
be pressure to increase renewal rates as insurers grapple with runaway
claims cost, which is typical in this class of insurance.
Rates are expected to increase by 5% to 15% in 2013, unless the
insured can demonstrate good loss history.
A relatively small class of insurance in Vietnam, workers compensation
renewal terms and rates will remain stable with limited changes in 2013.

Properties in areas exposed to a catastrophes such as floods,
earthquakes, or typhoons, will have a limited avenue to obtain
competitive terms and rates as carriers move away from insuring the
risk. Even with risks situated in non-catastrophe areas, companies
may face a flat renewal or a slight premium increase for 2013. A major
force driving the higher insurance cost is local carriers being hit with
higher treaty reinsurance costs in addition to coverage restriction by
the international reinsurance markets that continues to improve their
risk portfolios in view of the major losses in 2011 from the Asia and
Pacific regions. Looking ahead, companies with an adverse property
loss history or those that fall into the high risk or bad risk category
can expect to see their cost of insurance increase or, in a worst case
scenario, have coverage restricted with higher deductibles and the
need for several carriers to provide capacity/support to complete their
risk transfer exercise.
Marsh 13
Directors and Officers

The D&O market in Vietnam has encountered limited cases of loss
payout incidents, even though there have been more events involving
shareholders or regulators accusing senior company officials of
breach of duties. Vietnams D&O insurance is a relatively small and
specialised class of insurance; the true risk/claim expertise rests
predominantly with the international insurance carriers, although
local carriers are stepping up to provide alternative and thus adding to
competitive pressure.
Insurance for financial institutions is a fairly new class in Vietnam,
although the insurance products (for example, bankers blanket
bond) are well developed internationally. With modest uptake on
this class of insurance, the market is expected to be stable and
predominantly underwritten by the foreign and major local carriers.
Premiums are expected to be flat on renewal or experience a slight
decrease of around 5%.
The professional liability insurance market has remained stable
over the past year, with no major activity or losses affecting market
conditions. This market will remain stable, with pricing and terms
favourable for insurance buyers.
Medical Malpractice
Local papers highlighted several incidents involving doctors in major
hospitals who were alleged to have made wrongful decisions when
treating patients. This publicity has led to an increased awareness
around the legal rights of patients, especially in relation to their
attending doctor(s) and the clinics/hospitals from which these
professionals operate. Looking ahead, rates are expected to be flat or
show an increase of up to 10%.
Marine
The marine class of insurance (hull and liability, protection and
indemnity, cargo) continues to attract willing carriers to the risk. This
traditional class of insurance in Vietnam is also a competitively soughtafter risk sector, so rate reduction pressure continues to be the order of
the day. The leading marine insurers are targeting to maintain stability
in their premium offerings by expanding coverage without sacrificing
on premium. In other cases, a decrease in premium charges may be
the plan to attract new vessels into the marine fleet. Expect rates to
continue to decrease, likely between 5% and 10% in 2013.
Aviation
Rates: N/A
The aviation class of insurance is not available in the local market;
this insurance risk is underwritten in the specialist aviation. Rates are
expected to remain flat or see a slight decrease of 5% in 2013.
Employee Benefits
Health care medical costs and claims incidents have been increasing
steadily over the past years. With competitive pressure to keep
premium rates down and widen coverage, the major carriers have all
experienced high loss ratio, which they seek to amend by tightening
coverage and increasing premiums. Companies that can differentiate
their careful handling of risk and keep their loss ratio below the 60%plus mark will see a slight decrease in premium rates. However, a
large portion of insurance buyers in the Employee Health Insurance
program will face an increase in premium as avenues to transfer risk
cheaply become increasingly unavailable. Looking ahead on the
health front, rates will likely increase in 2013, especially for insureds
with a consistent high loss ratio over the past period that have few
risk mitigation solutions to control their declining risk profile. The
life insurance sector is expected to remain stable and no major
incidents can justify a dramatic increase in the personal accident class
of insurance other than inflationary pressure. This pressure will be
mitigated by competition, so a flat renewal or a slight increase in rates
for the personal accident line is expected for 2013.
Risk Trends
Fire Losses
Several major fire losses over the past four years
involving category 3 class of risk (that is, furniture
and wood work producers, paper, paint, plastic,
and garment factories) in Vietnam has changed
the risk appetite of the non-life insurance sector
towards insuring those risks. In the Vietnam property
insurance market, a hardening of premium rates and/
or a withdrawal of capacity/coverage is expected for
category 3 companies.
Employee Benefits Insurance

Pressure to increase rates for employee benefits
insurance will be more prevalent in 2013 as
inexpensive risk transfer options for this class of
business will be harder to come by. Rising medical
inflation cost and a growing sophistication among
employees making claims are rendering the present
premium rating and coverage unsustainable.
Contact:
Gary Leong
+84 8 3822 7455
gary.ch.leong@marsh.com
Insurance Markets by
Specialty and Industry
Aviation
Insurance Market Conditions
Market Commentary
The aviation market remains very soft, with most lead
insurers providing rate and premium reductions in
most cases. This current cycle is being driven by excess
market capacity and recent benign loss activity in the
airline market, which will result in the airline portfolio
still delivering a profit in 2012 to most underwriters,
despite falling premium levels. Aerospace business
(airport/product liability) and general aviation risks
are following a similar pattern to the airlines, with
premium reductions available to those insureds
that have gone clean and delivered a profit on their
account to the market. Barring any major losses, 2013
is expected to demonstrate similar conditions to 2012.
Capacity and competition for Asia aviation business
will continue, keeping rates low and ultimately
benefiting buyers.
Risk Trends
Capability Transfer to Singapore
Asia is still very much reliant on the London markets
for the major airline/manufacturing risks; however,
there is an increase in capacity and talent relocating
to Singapore. This trend has created a regional
hub, providing much better service and access to
underwriters within the region. This trend will
continue as regional and local markets continue to
increase their appetites instead of relying entirely on
the traditional markets in London. This is good news
for aviation insurance buyers.
Lead Insurers Going Solo

A trend of lead insurers providing very competitive
premiums and in some instances following
insurers refusing to match the terms and rates
was seen in 2012. As a result, there was a further
fractionalisation of the market last year, with
individual insurers setting their own pricing for their
capacity regardless of the position being adopted by
the leader. In some cases, this trend has resulted in
higher paid up terms for those clients where capacity
and market appetite are more limited.
General Aviation Sector Booming

The general aviation industry is booming across
Asia, with the number of private and chartered jets
continuing to increase yearly. This surge is providing
growth opportunities for insurers as well, and there is
an increased appetite for writing general aviation risks
in Asia, particularly from the emerging Singapore hub.
Rates continue to be competitive in this sector, driven
by ample capacity and competition among the markets.
Contact:
Tim Blakey
Region Head, Asia Aviation
+65 6922 8341
tim.blakey@marsh.com
Marsh 17

Market Commentary
Health care costs and medical inflation continue to
exert significant price pressure on companies offering
medical benefits to employees. As competition among
employers for qualified employees becomes more
intense, companies are looking to their employee
health and benefit programs to attract and retain staff.
These opposing market forces have been at play across
Asia for the past several years, impelling companies
to take a creative approach to structuring employee
health and benefit programs.
Rates have increased in areas where medical inflation
has been particularly acute. The table below reflects
the increases seen for medical inflation and projected
premium increases for 2012/2013.
The market for voluntary benefits, often called

top-up insurance, continues to expand in Asia as
personal wealth grows and individuals seek to spend
more money on personal protection. This year,
the same conditions are expected to prevail, with
increasing medical costs pushing up medical insurance
premiums. Employers will continue to use creative
plan design options to counterbalance the increasing
costs, such as flexible benefits and wellness programs.
Risk Trends
Government Regulations
Governments have been introducing new legislation
and mandates with respect to medical insurance. For
example, China enacted the Interim Measures for
the Participation in Social Insurance of Foreigners
Employed in China, which requires that foreigners
legally employed in China maintain basic pension
insurance, basic medical insurance, work-related
injury insurance, unemployment insurance, and
maternity insurance. In Indonesia, health reforms
are also at play, where legislators are considering the
implementation of the Jaminan Sosial Nasional,
which is an improvement on the existing social security
program in Indonesia. This will mandate compulsory
cover for medical, work-related injury, pension, and
death for all Indonesians. Similar programs are also
underway in other emerging markets such as Malaysia,
Thailand, and Vietnam.
Country
Expected
Change in
2012 General 2012 Medical Medical
Premiums
Inflation
Inflation
Australia
2.5%
5% to 7%
3% to 7%
China
3.3%
9% to 12%
10% to 12%
Hong Kong
4.5%
4.3%
8% to 12%
India
8.6%
15% to 20%
15% to 20%
Indonesia
6.5%
10% to 11%
9% to 12%
Focus on Wellness
Japan
-0.5%
0%
Not applicable
Malaysia
3.5%
10% to 15%
10%
New Zealand 3.9%
10%
10%
Philippines
2.9%
8% to 10%
10% to 12%
Singapore
2.9%
3% to 5%
4% to 8%
South Korea 3.5%
6%
10%
Taiwan
2.5%
4% to 5%
4% to 6%
Thailand
3.5%
20% to 25%
25% to 35%
The focus on wellness and prevention by large

multinational corporations (MNCs) is now spreading
to the small and midsize enterprise (SME) segment.
Companies are getting better at understanding
the reasons behind increased medical claims and
absenteeism, and are becoming more proactive
in implementing programs that address the root
causes. However, the solutions are still limited to
basic interventions such as stress reduction, smoking
cessation, and weight-loss programs. Providers of
wellness programs in emerging markets are still
in the evolution stage.
Vietnam
12.1%
12% to 25%
15% to 20%
Source: Mercer Marsh Benefits
Focus on SMEs
The introduction of custom SME insurance package
plans by insurers has enabled them to compete more
effectively with MNCs, which have traditionally been
seen as more attractive, given their deeper pockets for
benefits spend. This trend will help SMEs continue
to grow, as they are the economic and employment
backbone of most countries in Asia.
Contact:
Joan Collar
Employee Health & Benefits Regional Leader Asia
Mercer Marsh Benefits
+65 6922 8146
joan.a.collar@marsh.com
Marsh 19
Marine Hull
Market Commentary
The shipping industry remains extremely challenging.
Ship owners are managing record low charter rates,
reflecting decreased global trading volumes, while
the number of ships has increased. During 2013, the
general hull insurance environment is expected to
remain stable but all eyes will be on the reinsurance
costs for protection and indemnity (P&I) insurance,
for which the market is predicting some heavy
increases. In many cases, these will get passed directly
onto owners when they can least afford it.
Risk Trends
Iran Sanctions
The Iran sanctions directly affect the shipping
industry. Breaches of these sanctions have serious
regulatory, financial, and reputational implications,
and insurance is becoming pivotal to their
implementation and enforcement. This situation has
thrown the spotlight on the critical importance of
due diligence that ship owners must undertake when
chartering their vessels.
Rate Changes
For the P&I market, the February 2011 renewal
season was soft, with P&I clubs securing marginal rate
increases. However, when clubs analysed their claims
records at the six-month point, it became clear the
benign claims environment was no longer prevailing.
From late November 2011 through February 2012,
there was an unforeseen resolution to squeeze ship
owners to ensure that the increases achieved were as
close to the publicly announced figures as possible.
As a result, 2012 saw some large losses that hit
reinsurance, and claims costs have continued to inflate,
causing higher attritional losses for many clubs for
their retained accounts. Compounding this problem,
clubs continue to rate new tonnage very competitively.
While some clubs have recognised the tough trading
environment and are looking to use their reserves to
cover some of the deficit, other clubs are insistent on
maintaining financial stability and are seeking doubledigit increases in 2013.
With an abundance of capacity, insurance for hull and

machinery remains extremely competitive. Although
there have been significant losses in the hull market,
there have not been any significant rate increases.
On the contrary, good fleets are still getting marginal
reductions and insureds loyal to their underwriters
may see benefits with good credit balances.
Contact:
James Addington-Smith
Marine Hull Leader Asia
+65 6922 8068
james.addington-smith@marsh.com
Mining
Market Commentary
Although mining is still a difficult class of business
for most underwriters, premium rates in the sector
should remain flat after some significant increases
during 2012.
Contact:
John Holmes
Mining Practice Leader Asia
+852 2301 7310
john.holmes@marsh.com
Risk Trends
Frontier Markets in Focus
2012 will be remembered by the mining industry as
the year of Mongolia and Myanmar, with a flurry of
international activity in these two emerging markets.
International insurers are becoming more comfortable
with underwriting risks in Mongolia; the sophisticated
level of risk management and safety precautions
exhibited at the local mine sets a good example for
similar enterprises seeking to buy insurance.
Mongolias mining boom is not news; during the
year, however, the government passed new foreign
investment laws in an attempt to restrict the influence
over and ownership of its natural resource assets. Such
resource nationalism is a key global risk for miners
and project developers and has dampened foreign
investors view of Mongolias previous open for
business position.
Myanmar is developing as the next frontier for the
mining sector. The lifting of international sanctions
will allow international insurers to start assessing
and writing business there for indigenous companies
and foreign investors.
Marsh 21
Power and Utilities

Operational
Market Commentary
Thailand Floods
Construction
With European banks withdrawing from the project

finance arena to concentrate on bolstering their
balance sheets, it is becoming more difficult to raise
finances for a major project unless it has support from
export credit agencies. This situation has led to some
delays, which in turn can impact insurance pricing.
Fewer projects coming to market due to economic
uncertainty means underwriters will be keen to meet
their budgets on the fewer projects that ultimately do
get under way.
Operational
A market dynamic of insurers seeking rate increases

and buyers seeking flat renewals or rate decreases
after they were hit with increases in 2012 is expected
for the year ahead.
Risk Trends
Construction
Soft Market Continues
The construction insurance markets in London,

Dubai, and Singapore continue to remain very
competitive. The weather-related claims of 2011 have
had no significant impact on market rates for the
construction of new projects in areas not affected
by natural catastrophes. However, there have been a
couple of large construction losses on power projects
during testing and commissioning that might have
some impact on price. During the soft market over the
last four to five years, there has been no corresponding
erosion of deductibles, increases in design cover, or
wider/higher sublimits.
Singapore a Regional Hub
Singapore continues to be a highly competitive

regional market hub, with the lowest premium when
benchmarked against its peers. The number of
underwriters writing construction risks in Singapore
continues to grow, with a significant transfer of
expertise from London to Singapore taking place.
2012 was a benign year in terms of large-scale events in

the Asia Pacific region, which has provided breathing
room for some insurers to establish their final
positions on claims arising out of the Thailand floods
in late 2011. The flooding was a shock to the market
against a background of historically low pricing.
However, more than a year later, memories and
market discipline seem to have waned, especially as
flood seems to be less of an issue for European-based
insurers.
BI and CBI
Large business interruption (BI) and contingent

business interruption (CBI) claims arising out of Japan
and Thailand have made carriers more wary of their
exposure, including gas take or pay obligations. This
has led to some insurers reducing their line sizes.
Contact:
Philippe Du Four
Chairman Global Power Practice
+65 6922 8126
philippe.dufour@marsh.com
Technology and
Telecommunications
Market Commentary
The technology and telecommunication industry in
Asia continues to feel the effects of sluggish global
economic growth. Demand issues from Europe
continue to weigh on the profitability of technology
companies, where margins are already wafer thin.
The market for semiconductors in particular
experienced a slowdown in growth in 2012 as a result
of macroeconomic conditions affecting the global
electronics supply chain. There are clear differences
in approach being seen from local, regional, and
international markets. International insurers,
still wary from the natural catastrophe losses, are
still putting an emphasis on contingent business
interruption exposures. The local and regional
insurers, however, continue to offer competitive
terms. The large domestic Chinese insurers in
particular are very competitive, and are increasingly
participating on global programs.
Contact:
Sirikit Oh
Technology Practice Leader Asia
+65 6922 8129
sirikit.oh@marsh.com
Risk Trends
Catastrophe Rates Stabilise
From a catastrophe insurance perspective, rates
have stabilised after the severe market dislocation
caused by the Japanese earthquake/tsunami disaster
and Thailand floods, which affected the technology
sector in particular. After sudden rate increases in
2011 and the beginning of 2012, the environment
has stabilised. 2013 is expected to bring more of the
same conditions, barring any large catastrophes in
technology-heavy markets like China, Taiwan, Japan,
Korea, and Thailand.
In China, rates will remain competitive given strong
local treaty capacity and reinsurance support. In
Taiwan, most insureds experienced rate increases last
year, particularly on catastrophe exposures following
implementation of the Taiwan Tariff Regulation. Rates
are expected to stablise or slightly increase in 2013 in
situations where some local carriers might continue to
be conservative when writing primary layers; this will
increase the demand for international market capacity
and drive up the overall cost structure, especially for
catastrophe exposures. In Korea, rate movement is
quite stable supported by local treaty capacity. In other
markets, such as Southeast Asia, rates are expected
to remain stable, with sufficient capacity offered
by local carriers.
Marsh 23
Trade Credit
Market Commentary
Looking ahead to 2013, the trade credit insurance
market will continue to be driven by the global,
regional, and local economic and insolvency trends. As
more companies in Asia become concerned about the
ability of their customers to pay, trade credit insurance
will continue to enjoy strong demand. Underwriters
will continue to carefully assess the situation and
adjust pricing according to their underwriting criteria,
portfolio exposure, and economic data.
Risk Trends
Euro zone Crisis Spurs Demand
Demand for trade credit insurance, which companies
buy to protect themselves from the risk of default
by trading partners, is up by at least 20% across the
region, amid worries that the weak global economy
will continue to affect the ability of customers to pay.
Interest is coming from industries such as consumer
electronics, chip, and auto part manufacturers, all of
which are core sectors in Asia and all of which are
highly sensitive to global economic demand cycles.
Using insurance instruments to enhance loans and
accounts-receivable purchasing remains a popular
approach with financial institutions.
Rising Rates
Since there is a direct correlation between trade credit
insurance premium rates and the country where
the buyers are domiciled, underwriters are charging
much higher rates and offering much lower credit
limits for risks based in high-risk countries such as
Spain, Italy, and other euro zone countries. Some
trade credit insurers have withdrawn cover completely
for buyers based in particularly troublesome
countries such as Greece.
Contact:
Raffy Rios
Trade Credit Practice Leader Asia
+65 6922 8135
raffy.rios@marsh.com
Political Risk and

Structured Credit
Market Commentary
Political and sovereign non-payment risk has become
critical for Asian companies investing overseas or
those involved in trade finance activities in emerging
markets. There has been a dramatic increase in the
use of structured trade credit insurance across Asia,
as European banks use it as a way of simultaneously
remaining active in Asian trade finance market and
deleveraging their trade finance portfolios. Political
risk insurance has also become increasingly vital as a
risk management instrument for major infrastructure
projects, including helping to secure financing. By
providing cover for possible losses resulting from
expropriation acts, currency inconvertibility, and
political violence, political risk insurance can reduce
erosion of value caused by sudden disruptions to
operations, allowing more focus to be placed on
measures to increase profit potential.
Contact:
Richard Green
Political Risk, Structured Credit and Surety Practice Leader Asia
+65 6922 8136
richard.d.green@marsh.com
Looking ahead, rates are expected to increase for

insurance relating to assets in high-risk geographies
such as the Middle East and North Africa.
Risk Trends
Rise in Structured Trade Credit Demand
As the euro zone debt crisis combines with Basel III
capital requirements to increase pressure on balance
sheets, banks are looking to innovative ways to
maintain market share in emerging markets. Structured
trade credit insurance covers the risk of non-payment
from a buyer for goods and services or a borrower for
trade related loans. It covers transactions with a credit
risk exposure of between one and seven years, and
many European jurisdictions allow banks to count it
as tier-one regulatory capital under Basel III rules that
provide capital relief for banks.
Growth in Political Risk Insurance

The political risk insurance market is growing
worldwide. According to MIGAs World Investment
and Political Risk report, foreign investments covered
by political risk insurance have grown from 5% to
8% a decade ago to 13% to 15% in 2011. Political risk
insurance policies issued by the Berne Union, an
association for export credit and investment insurance
worldwide, reached US$77.5 billion in 2011, an
increase of 46% from five years ago.
Marsh 25
Warranty and Indemnity

Insurance
Contact:
Market Commentary
Rohan Bhappu
Private Equity and M&A Services Practice Leader Asia-Pacific
rohan.r.bhappu@marsh.com
The market for warranty and indemnity insurance

(W&I) continues to grow in Asia, as buyers and
sellers of companies look to de-risk their transactions.
W&I insurance (also known as reps and warranties
insurance) provides recourse against breaches of the
warranties and indemnities being given by the seller
in the sale and purchase agreement. The use of W&I
insurance will continue to increase consistent with
the outbound Asia mergers and acquisitions (M&A)
trends. In addition, more insurers are writing this
niche class of insurance within Asia, transferring
expertise to the region, which is benefiting buyers of
this insurance in terms of choice, coverage, and price.
Demand Grows
Demand for transactional risk insurance has soared

as both buyers and sellers worry about how to protect
their positions during a deal. Sellers are increasingly
building transactional risk insurance into the M&A
process in order to exit with minimal post-closing
warranty exposure, while preventing buyers from
seeking to reduce the purchase price.
Outbound M&A
Asian M&A remained robust in the face of tumultuous

markets in the second quarter of 2012. China and
Japan dominated the M&A scene, accounting for more
than 50% of deal value. China notched US$28.5 billion
in M&A during the second quarter of 2012, followed
by Japan, which ended the quarter with US$25.8
billion worth of deals. Outbound M&A activity from
Japan has risen over the past five quarters and looks set
to continue this trend as Japanese companies continue
to deploy large amounts of capital.
Notes
Marsh 27
Notes
About Marsh
Marsh is a global leader in insurance broking and risk management. We help clients
succeed by defining, designing, and delivering innovative industry-specific solutions that
help them effectively manage risk. We have approximately 26,000 colleagues working
together to serve clients in more than 100 countries. Marsh is a wholly owned subsidiary
of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services
companies offering clients advice and solutions in the areas of risk, strategy, and human
capital. With more than 53,000 employees worldwide and annual revenue exceeding $11
billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a
global leader in providing risk and reinsurance intermediary services; Mercer, a global leader
in talent, health, retirement, and investment consulting; and Oliver Wyman, a global leader
in management consulting. Follow Marsh on Twitter @Marsh_Inc.
For further information, please contact your local Marsh office or

visit our website at marsh.com
Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer, and Oliver Wyman.
This document and any recommendations, analysis, or advice provided by Marsh (collectively, the Marsh Analysis) are not intended to be taken
as advice regarding any individual situation and should not be relied upon as such. This document contains proprietary, confidential information
of Marsh and may not be shared with any third party, including other insurance producers, without Marshs prior written consent. Any statements
concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to
be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modeling, analytics,
or projections are subject to inherent uncertainty, and the Marsh Analysis could be materially affected if any underlying assumptions, conditions,
information, or factors are inaccurate or incomplete or should change. The information contained herein is based on sources we believe reliable,
but we make no representation or warranty as to its accuracy. Except as may be set forth in an agreement between you and Marsh, Marsh shall have
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Marsh Risk Management Research

Insurance Markets by Country

Insurance Markets by Specialty and Industry

Power and Utilities ........................22

Employee Health and Benefits.......18

Trade Credit ..................................24

Political Risk and Structured

The need for infrastructure investment across the

Costly Employees Comp

Non-CAT Rates Stay Low

D&O Rates Stable For Us

Other Financial Lines STABLE

Japan earthquake rates remain around 30% to

China professional liability rates remain stable, with

In the Philippines, natural catastrophe perils are

As professional indemnity is becoming a standard

2 Insurance Market Report 2013

4 Insurance Market Report 2013

Directors and Officers (D&O)

Employee Health and Benefits

Return Of High D&O Rates

Medical Insurance Rates

Directors and Officers (D&O)

6 Insurance Market Report 2013

Employee Health and Benefits (Group Risks)

Soaring Employees Comp Premiums

Personal Liability Exposure for

Directors and Officers (D&O)

Employee Health and Benefits

Property and Fire Insurance Pricing

Weakening Country Risk Ratings

Property: Catastrophe (CAT) Exposed

Directors and Officers (D&O)

8 Insurance Market Report 2013

Employee Health and Benefits

Directors and Officers (D&O)

Employee Health and Benefits

personal lines of insurance, particularly for those

Strong Domestic Retention

Directors and Officers (D&O)

Employee Health and Benefits

One insurer recently announced it will cease offering auto insurance

Property: Catastrophe (CAT) Exposed

Directors and Officers (D&O)

Capacity in the market decreased due to consolidation

Local markets remain restrictive towards financial institutions.

As professional indemnity is becoming a standard requirement for

10 Insurance Market Report 2013

Employee Health and Benefits

Expanding Risk Portfolios

Property: Catastrophe (CAT) Exposed

Directors and Officers (D&O)

Employee Health and Benefits

Property Insurance Rates

Professional Liability Insurance

Employee Health and Benefits

Property: Catastrophe (CAT) Exposed

Directors and Officers (D&O)

12 Insurance Market Report 2013

Property: Catastrophe (CAT) Exposed

creating opportunities for all major business

Property: Non-CAT Exposed

Directors and Officers (D&O)