OREANDA-NEWS. Reinsurance regulatory and market structures are taking divergent approaches in Asia-Pacific countries, as economic and political developments, along with market maturation across the region, vary widely, according to a new A.M. Best briefing.

The Best’s Briefing, “Asia-Pacific Reinsurance Movement,” notes that global reinsurers see the Asia-Pacific region as a means to diversify and grow, particularly in big emerging markets like China and India. At the same time, regulators in these countries are mulling their reinsurance strategies amid the growing and evolving markets. While there will be a trade-offs between nourishing local players with favorable policies and promoting open markets, A.M. Best notes that the role of reinsurance remains universal, as it supports overall financial strength and helps reduce volatility against big losses for primary insurers.

Retention ratios of countries in Asia-Pacific remain in the range of about 50% to 90%, with Japan insurers having the highest average ratio in 2014 at 92%, and insurers in the Philippines recording the lowest average ratio, at 49%. The region accounts for nearly 15% of global nonlife reinsurance gross written premium, according to A.M. Best.

The briefing also notes that national reinsurers dominate many Asian markets, and these reinsurers rely heavily on international markets for retroceding risks. In recent years, most of the emerging markets appeared to be moving toward deregulation in reinsurance, but recent regulatory changes in some countries has moved the emphasis back to localization.