Market Report: Asia - Slow growth in Japan but India has capacity.

(From Reinsurance)

Japan market still showing slow growth ...

The world's second-largest non-life market displayed very slow growth in recent years, mainly due to the weakness of the economy until recently and a near-zero inflation rate. The cumulative growth in net premiums since 1996 was less than 3%. There have been numerous mergers, resulting in larger companies that require diminished recourse to reinsurance.

Although Japan suffers from frequent natural disasters, such as typhoons and seismic activity, it makes relatively modest use of reinsurance. Outward reinsurance premiums placed by the 50 non-life companies active in this market amounted to Y255bn in 2003, or 2.5% of domestic direct premium income (Y10 313bn or $101bn at the current rate of exchange). Claims received Y123bn, or 48% of premiums, thus creating a deficit (before commission payments are taken into account) of Y132bn.

Surprisingly, claims received on these covers remain low and even in 1995,the year of the major Hanshin-Awaji (Kobe) earthquake the claims ratio was less than 50% on its international accounts

Inward reinsurance premiums accepted by Japanese insurers of Y 225bn, however, were burdened by claims payments of Y279bn, creating a deficit under this account in 2003. The overall deficit incurred for 2003 on the reinsurance account for Japan was Y186bn.

- but India has spare capacity