The proportion of losses uninsured in the Asia Pacific region remains high. For example, examination of 2017's major landfalling typhoons in China shows a wide discrepancy between economic and insured losses.
On average, just 10 percent of the total economic loss is likely to be recovered from the insurance market. Contrast that with the insurance market penetration in two of this year's headline grabbing storms in the United States.
The tables indicate that insurance penetration in the United States is much higher, close to 40 percent. Clearly, this indicates room for growth in the Asia insurance markets.
Convergence Capital
As a source for natural catastrophe risk transfer "alternative" to traditional reinsurance, convergence capital continued to exhibit steady growth to meet the demands of various risk transfer counterparties. Commonly referred to as insurance-linked securities, the collection of collateralized reinsurance, catastrophe bonds, industry loss warranties, and sidecars was considered to have reached an estimated USD 75 billion, approximately 20 percent of the global catastrophe risk limit. As of September 30, 2017, approximately 11.6 percent of total global outstanding catastrophe bond risk limit provided capital markets-backed reinsurance protection to Asia Pacific sponsors, which comprised mostly Japanese and Australian cedents. The nominal risk limit outstanding in the Asia Pacific region experienced a net increase of 5 percent.
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