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Asia Pacific

Published on 13 January 2021

In this chapter of our Annual Insurance Review 2021, we look at the main developments in 2020 and expected issues in 2021 for Asia Pacific.

Key developments in 2020

Over a year since the first outbreak of Covid-19 was reported in Wuhan, China, many countries across Asia Pacific and globally continue to struggle to contain the virus, resulting in a protracted path to recovery for many economic sectors impacted by the pandemic. 

Insurers have seen an increase in claims across many commercial lines of business, including under business interruption, trade credit and surety, D&O, and event cancellation policies. 

However, while many businesses have been hit hard by the economic repercussions of the pandemic, relatively few BI policies have ultimately responded to interruption losses. Legal proceedings have already been commenced in relation to claims in certain jurisdictions in Asia to determine questions of policy application. As was the case with SARS, it is likely that certain claims will be hotly contested before courts and tribunals.

In Australia, policyholders won a test case before the New South Wales Court of Appeal. This is the first of a number of test cases being brought in relation to Covid-19 related business interruption losses. In a unanimous judgment, the Court found in favour of policyholders, ruling that insurers could not rely on certain disease exclusion clauses to deny claims by policyholders for loss caused by BI due to COVID-19. 

The policies considered by the Court provided cover for interruption caused by outbreaks of certain infectious diseases within a 20km radius of the insured's premises, subject to an exclusion for "diseases declared to be quarantinable diseases under the Australian Quarantine Act 1908 ("Quarantine Act") and subsequent amendments" ("Exclusion Clause"). However, the Quarantine Act was repealed in June 2016 (i.e. before the commencement of the relevant periods of cover) and replaced by the Biosecurity Act 2015 ("Biosecurity Act"). The Court determined that on a proper construction, the Exclusion Clause did not refer to the Biosecurity Act and therefore did not exclude insurers' liability with respect to interruption losses resulting from Covid-19.

The Court held that whilst there was a suspected mistake on the part of the insurers in not amending their policies to refer to the Biosecurity Act, suspicion was not enough to correct a mistake and there was no basis to suspect that the insureds had overlooked anything. The Insurance Council of Australia (ICA) has announced that it will appeal the ruling.

Aside from the pandemic, the pace of regulatory change across Asia and Australia has continued over 2020. Restrictions on foreign ownership of life insurance companies in China were lifted in January 2020, meaning that investments in life insurers, reinsurers or intermediaries are no longer subject to any foreign ownership restrictions. 


It is likely that many countries will continue to see increased company failures due to the impact of the pandemic, which will continue to impact the insurance industry, particularly in areas such as trade credit and surety. Continuing economic downturns will likely result in further D&O claims. There are also likely to be further proceedings filed in relation to policy disputes arising out of Covid-19 related business interruption claims. 

Insurers are likely to continue to review policy wordings, in a hardening market, in tandem with rate increases. 

The digitalisation of businesses and the increase of employees working from home, has increased the risk for cyber-attacks, and may well lead to increasing demand for cybersecurity insurance in 2021. The pandemic may also serve as a catalyst for insurers to embark on further digital transformation of their organisations, to become more agile and connected. 

An increased investment in InsurTech is expected in 2021. Jurisdictions, such as Hong Kong and Singapore, have introduced expedited licensing or ‘sandboxes’ (in which products can be tested) to encourage new market entrants. Opportunities will continue to grow for InsurTech start-ups, as certain existing products reliant upon legacy systems may struggle to keep pace with changing trends.

Download our full Annual Insurance Review 2021 for more insights.