Insurance Daily News

Hanoi Re Adopts Selective Growth Strategy Amid Soft Market

Hanoi Re is navigating the current soft market by adopting a strategy of selective risk expansion, according to CEO Trinh Anh Tuan. While the reinsurer remains committed to supporting clients through the current cycle, the company is maintaining strict technical limits on the structures and shares it is willing to underwrite. Trinh emphasized that while the firm is prepared to compete for business, it will withdraw from opportunities where terms do not support sound underwriting decisions.

The reinsurer is exploring new areas, including risks related to artificial intelligence, electric vehicles, and parametric solutions. However, participation in these sectors is contingent upon the company's ability to clearly assess exposures, coverage, and risk management practices. Trinh noted that rate adequacy remains a primary concern, particularly within proportional treaties, where reductions in cedent rates often coincide with requests for higher commissions. Consequently, Hanoi Re is scrutinizing original rates, deductibles, coverage, and loss trends rather than relying solely on treaty terms.

Looking ahead, Trinh expects the market softening observed during this year's Asian renewals to persist until 2027. He noted that while pricing has faced pressure, policy wordings have generally remained stable. Hanoi Re intends to maintain a close focus on these wordings, as concessions in this area often only become apparent when claims occur.

The regional risk landscape, particularly in Vietnam, is evolving rapidly. Trinh pointed to the impact of Typhoon Yagi in 2024 as evidence that the concentration of high-value assets in industrial parks and logistics corridors can lead to significant losses. He highlighted that business interruption and supply-chain dependencies often extend claims beyond physical damage. Furthermore, the rapid growth of industrial assets in Vietnam has sometimes outpaced the growth of sums insured and exposure data. Trinh warned that competition is currently outpacing risk understanding, which could lead to the underpricing of accumulations.

Hanoi Re plans to keep Vietnam and Southeast Asia as its core business focus over the next 12 months, with China and South Korea serving as additional growth drivers. Trinh advised cedents to utilize current market conditions to improve exposure data, update asset values, and refine risk retention. He also urged clients to prioritize partners with a proven track record of honoring commitments, noting that the true value of a reinsurance relationship is tested at the time of a claim.

For industry stakeholders, Hanoi Re’s cautious stance highlights the tension between competitive pricing pressures and the need for rigorous risk assessment in a rapidly developing industrial landscape, suggesting that underwriters who prioritize data quality and underwriting discipline may be better positioned to navigate potential long-term accumulation risks.

Why it matters

Hanoi Re's strategy illustrates how regional reinsurers are balancing the need for growth with underwriting discipline in a softening market characterized by complex, emerging risks.

FAQ

What is Hanoi Re's approach to the current soft market?
The company is prioritizing a broadening but selective risk appetite, maintaining flexibility in the structures it supports while withdrawing from business where terms do not support sound underwriting decisions.

What specific risks is Hanoi Re interested in exploring?
The reinsurer is open to insurance needs arising from technology, AI, electric vehicles, and parametric solutions, provided they can clearly assess the exposure and coverage.

How does Hanoi Re view the impact of Typhoon Yagi on the market?
The event highlighted that as valuable assets concentrate in industrial parks and logistics corridors, the same event can produce significantly larger losses, especially when considering business interruption and supply-chain dependencies.

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