Insurance Daily News

Peak Re CEO warns Asia reinsurance exposure outpaces premiums

Victor Kuk, chief executive of Peak Re, cautioned that capital inflows are outstripping premium growth in Asia’s reinsurance market as urbanisation, high-tech factories and climate risks create new layers of exposure. While investors continue to pour money into the region because of strong returns, the insurer sees a widening gap between the amount of risk being written and the premiums collected to cover it.

Kuk highlighted two primary drivers of rising exposure: the rapid expansion of cities and the construction of data centres, AI infrastructure and semiconductor facilities. He said these assets are increasingly inter-connected, making loss aggregation a complex challenge for reinsurers. Understanding how many treaties would respond to a single AI-data-centre loss, and identifying “clash cover” where a single event triggers claims across multiple lines, are now top priorities.

The Philippines, according to Kuk, illustrates the fastest widening of the exposure-premium gap, driven by intense urban growth. This has sparked discussions among insurers, reinsurers and governments about public-private catastrophe programmes, but he warned that such schemes take time to design, fund and operationalise.

On the demand side, after a hard market forced many cedents to cut reinsurance purchases, the current softening of prices is prompting clients to seek more coverage. Kuk noted a resurgence of interest in aggregate covers, adjustments to attachment points and sub-layer programmes, though the volume of new business remains selective compared to pre-hardening levels. Commission levels are also rebounding, with clients now asking for higher commissions as the market softens.

Peak Re plans to keep expanding its Asian footprint while also growing in the United States and Europe. In the U.S., the firm will broaden its focus from casualty into property and specialty lines through 2027. The insurer’s strategy in Asia will centre on disciplined growth, emphasizing risk prevention, better understanding of exposure aggregation and collaboration with public entities on catastrophe risk.

Why it matters

Asian insurers and reinsurers must adapt underwriting and pricing to match faster-growing exposures, or risk under-capacity and loss accumulation.

FAQ

What are the main sources of new exposure in Asia according to Peak Re?
Rapid urbanisation and the build-out of data centres, AI infrastructure and semiconductor facilities.

Why are public-private catastrophe programmes progressing slowly?
Designing, capitalising and operationalising such programmes takes time, according to Kuk.

What changes are cedents seeking in the current soft market?
More aggregate covers, adjustments to attachment points and sub-layer programmes, and higher commissions.

How is Peak Re planning to grow its business globally?
By expanding in Asia and building presence in the United States and Europe, adding property and specialty lines in the U.S. through 2027.

Source: Insurance Asia News. See the original source for full details.