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India, China driving Asia insurance sector growth

India and China are "dynamically" driving the growth of insurance markets in Asia and the outlook for this industry in the region is "sanguine" despite short-term uncertainties, a new study has found.

The prospects for life insurance are particularly positive, says the study conduced by Swiss Re, one of the world's leading reinsurers.

Globalisation and other associated trends are bringing about an "irreversible transformation" of Asian insurance market.

This process has been expedited by the "soothing impact" of the Asian financial crisis on reform resistance and its contribution towards acceleration of change, including deregulation, particularly "on the back of gradual opening up of two of the most important growth markets - China and India," the study says.

Based on innovative approaches to distribution, life insurance penetration is set to increase, particularly in India and China, where banks boast of far-flung distribution networks, it says.

The factors, which are driving the growth include deregulation which is opening up the markets, cheaper and more effective distribution channels and ongoing industry consolidation, it says.

Asia's insurance markets, the study found, have bounced back from a slump following the Asian financial crisis with non-life and life insurance businesses, excluding Japan, expected to grow annually by 7.9 per cent and 8.9 per cent respectively in real terms from 2001 to 2005.

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