KUALA LUMPUR, Nov 4 -- AM Best, a global credit rating agency is maintaining its stable market segment outlook on Japan’s non-life insurance segment.
According to a statement, the agency is citing sustained profitable underwriting performance and carriers’ ability to weather market volatility and maintain solid risk-adjusted capital levels.
Despite large-scale catastrophe losses last year, profitable performance in most other classes of business, particularly voluntary automobile insurance, non-life insurance companies in the country still generated an overall underwriting profit.
This is according to a new Best’s Market Segment Report, ‘Market Segment Outlook: Japan Non-Life Insurance’.
AM Best said COVID-19 was unlikely to have a significant impact on the underwriting performance of Japan’s non-life companies over the short to medium term.
Claims directly related to COVID-19 are expected to be manageable, given that domestic non-life insurers generally have limited net exposure to event cancellation and business interruption risks in Japan.
Based on the report, any direct negative effect on underwriting profit likely will be mitigated by the decline in claims frequency for voluntary automobile insurance, especially during the period that Japan declared a state of emergency.
In addition, most non-life companies have actively taken pre-emptive steps to offset potential effects of the pandemic, primarily through accelerating the pace of digital transformations and business reforms to raise productivity and efficiency.
AM Best notes that most major market participants have sought to develop a better perception of exposure to climate risk, as well as raise premiums on fire, flood and wind damage covers; exercise prudence and control catastrophe risk retentions; and secure sufficient capital to maintain financial soundness.
-- BERNAMA
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