"Furthermore, even though economic growth is moderating, the impact on premium sales has only been mild, while regulatory risk -- which is at a high level in the region generally -- has had a neutral to slightly positive effect from a credit perspective," says Sally Yim, a Moody's Vice President and Senior Credit Officer.
In the area of products, Moody's notes that while various measures, such as the reduction in the guarantees offered on new business, are credit positive for insurers in Asia, new sales are still not material when compared with outstanding liabilities. Accordingly, the industry will require several years before it can offset its legacy-business risks.
Aging populations also mean that insurers are increasingly promoting more long-term healthcare, savings and retirement products.
Moody's further considers that the sector's trend of investments in riskier asset types, including equities, real estate and infrastructure project loans, will continue amid low interest rates.
With the regulatory environment in Asia, Moody's sees a greater focus on customer protection, a development which will make it more costly for insurers, both in terms of their underwriting and claims functions.
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