Kathmandu. As the insurance industry seeks to grow and efficiencies, insurance companies in the Asia Pacific region need to prepare for a wave of mergers and acquisitions in the next 3 years.
That’s according to a recent survey by Clearwater Analytics Holdings Inc. The survey found that 96 percent of insurance asset management executives in the Asia Pacific region expect domestic mergers and acquisitions activity to increase. About 15 percent expect these deals to grow rapidly.
In October last year, the survey included 150 senior executives of life, health and non-life insurance companies, as well as third-party investment managers. In addition, they oversee about $ 3.8 trillion in assets.
The main reason for the wave of mergers and acquisitions among insurers is the rapid increase in competitiveness. Insurers in the sector also want to diversify risk into insurance products and markets.
Executives in Hong Kong, Singapore and Australia cited the need for a stronger insurance sector to revive synergies, strengthen balance sheets and boost the economy. In a separate report, Norton Rose Fulbright LLP said global insurance M&A may have increased last year after several large insurance broker deals were completed or announced in late 2024.
Insurance regulations are on the rise in the Asia-Pacific region. From January 2025, Australia’s big insurance companies will be required to report direct and indirect greenhouse gas emissions across their operations and supply chains. Regulations related to artificial intelligence (AI) are also getting stricter.
Stricter requirements for high-risk AI systems used in underwriting are expected this year. Singapore, Hong Kong, and the UK are scaling up governance frameworks for generative AI and larger models.
Clearwater said eliminating competitors was the least important reason for the deal. Companies are focusing more on strengthening operations rather than eliminating competitors.
Shane Ackroyd, chief strategy officer and president of Clearwater Analytics’ Asia Pacific region, said standalone operations can withstand difficulties in a market where there is more regulatory and investment demand. He said, “Insurance companies with strong leadership in the next 3 years can be distinguished from those acquired. As contract activity grows, insurance companies face some questions. The answer to which could determine which companies emerge stronger in a difficult operating environment. –Insurance Asia
