Insurance expert tips tighter policies, premiums

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A leading industry expert is predicting a bleaker outlook for the insurance sector in Asia. Antony Sassi, the managing partner, Asia at Reynolds Porter Chamberlain, and Hong Kong Insurance Law Association president, said he expected a new landscape with increases in premiums and tighter policies.

“What we are seeing in Asia is more of a global phenomenon, where there is hardening market, which is essentially the insurance companies taking a harder look [at policies],” Sassi told Asia Business Law Journal.

“Insurers are increasingly looking closer at the policy terms and conditions to see if there is cover for issues, which perhaps they weren’t doing in the past. This is going to be a bit of a game changer for the insurance industry.”

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Antony Sassi

Before the pandemic, many insurers dealt with property and casualty claims arising from civil unrest around the world, which included things like coverage to structures, property and belongings in the event of vandalism, theft, etc. But when covid-19 emerged, the industry had to grapple with the additional issue of coverage for non-damage business interruption.

Sassi said there was a period where many insurers in the market offered policies that companies could get at a low price, “with all the bells and whistles”. However, the risk exposure resulting from the pandemic pushed insurers to come up with new measures.

He said insurers needed clarity on the type of cover they could provide going forward, at the right price. With this new knowledge, premiums will typically rise because of the increased risk that companies are anticipating. This could mean less cover available for more money.

“That’s a reflection of the additional exposure that insurance carriers are going to be picking up from the pandemic,” said Sassi. “We’ve seen that consistently in Asia.”

This trend will occur across all insurance sectors, however some classes of business may see more impact than others, such as property insurance and business interruption cover, for income lost in a disaster.

“What we typically see in the industry is the spillover into a broader theme, in terms of how insurers are writing risk and what they’re appetising,” said Sassi. “When you enter a harder market, it tends to be a hard market across the piece, and particularly hard in certain areas.”