The report says demand for catastrophe reinsurance is growing in the Asia Pacific region “and all indications point to further growth for the future.”

The broker estimates that a quarter of the total catastrophe excess of loss limit purchased around the world is for coverage in the Asia Pacific region.

Guy Carpenter goes on to say that while the share of premium for catastrophe excess of loss is just under 15 percent, it represents a doubling of global premiums over 2007, “evidencing considerable growth of the region in just four years.”

The insurance markets are dominated by mature markets in Japan and Australia. Insurance penetration is high and the associated purchase of catastrophe reinsurance from the international market is significant.

The other Asia Pacific powerhouses—China, India and parts of South East Asia—“have shown the most impressive growth rates globally.” The markets are competitive because supply exceeds demand. Reinsurers and insurers see the growth possibilities in these markets and international reinsurers are “keen to achieve a market presence in these territories.”

However, due to recent loss activity and the reality that the region is home to extensive seismic activity, Guy Carpenter asks if the international players may “re-think their business strategies.”

The report notes that among some pressures the reinsurance industry may feel toward doing business in the region is inadequate rates compounded by low interest rates on investments. They must also deal with increased risk-capital requirements that will be required under Solvency II and associated compliance costs. Growing inflation remains another concern along with the purchasing power in the future.

Despite these concerns, Guy Carpenter says reinsurers' capital remains “more than sufficient” to meet demand and “competition makes the general market direction difficult to foresee” at this time.