APAC insurers stay stable despite claims pressure: Fitch Ratings

Non-life insurers face higher claims costs that are reducing underwriting margins.

Chinese and Taiwanese insurers will likely see a deteriorating outlook for 2026, whilst other Asia-Pacific (APAC) insurers maintain a stable outcome for the year.

Fitch Ratings said the region has strong capital positions, disciplined underwriting and improved asset-liability management despite ongoing economic and market pressures.

The ratings agency said resilient capital buffers across the region are helping insurers manage higher claims inflation, market volatility and the impact of new solvency regulations. 

Non-life insurers across APAC are facing rising claims costs, which are reducing underwriting margins. 

Supply-chain disruptions linked to geopolitical tensions have added pressure, particularly in health and motor insurance.

Insurers in South Korea and Indonesia are reporting higher losses in these segments, whilst Australian insurers continue to face elevated home and motor repair costs.

Fitch said these challenges are being partly offset by higher interest rates, improved reinsurance market conditions and earlier premium price increases. 

However, it warned that market and credit risks remain a key concern.

In Japan, insurers are adapting to a new economic value-based solvency framework that came into effect at the end of March 2026. 

The new rules require higher capital levels, which insurers have addressed through retained earnings, the issuance of hybrid securities and risk-reduction measures.

Japanese non-life insurers have also continued to sell strategic shareholdings, helping to strengthen capital positions. Fitch said profitability in the domestic market remains healthy.

In Indonesia, the first phase of higher minimum equity requirements could lead to further consolidation amongst insurers. 

The adoption of PSAK 117 accounting standards may also put pressure on reported equity levels at some companies.

Despite this, Fitch noted that around 80% of insurers have already met the minimum equity requirement due by the end of 2026.

The agency expects the regulatory changes to improve market discipline over the medium term.

Fitch's deteriorating outlook for China's life insurance sector reflects the impact of persistently low interest rates and growing exposure to equities. 

The agency said these factors are increasing reserve requirements and capital needs whilst making insurers more sensitive to stock market movements and geopolitical risks.

However, insurers have taken steps to offset some of these pressures through more dynamic pricing, tighter commission controls and a shift towards participating insurance products. 

These measures have improved new business value margins and reduced liability costs. Taiwan's life insurance sector also continues to face challenges, according to Fitch. 

Whilst new foreign-currency accounting rules have helped smooth reported earnings, they do not address underlying currency risks.

The agency said it remains unclear how insurers' solvency positions will perform under Taiwan's new capital adequacy regime, which was introduced in 2026. 

Premium growth remains supported by strong demand for US dollar-denominated interest-sensitive policies, whilst insurers are focusing on products that improve capital efficiency and generate higher contractual service margins.