“Many of the region’s insurance markets are undergoing their most significant regulatory updates in decades.  

“Supervisory authorities in Indonesia, Malaysia, Vietnam, the Philippines, and Thailand are tightening capital regimes, raising solvency minimum requirements, and encouraging more robust risk management practices,” Miow said. 

In Indonesia, phased increases will require insurers to hold up to IDR1 trillion (about US$60 million) in capital by 2028 – setting one of the highest capital thresholds in Asean.  

“This move is widely expected to lead to a wave of industry consolidation, as smaller and mid-sized insurers seek new investors, partners, or acquirers to meet the heightened requirements,” she said.  

Malaysia is preparing to implement the Risk-Based Capital 2 (RBC2) framework, Philippines maintains its current minimum capital requirements with potential regulatory updates under evaluation for future implementation.  Vietnam is implementing a phased transition to update its regulatory requirements, with some capital raising activity observed as insurers prepare for future growth. 

In Thailand, the Office of Insurance Commission (OIC) is enhancing prudential oversight by integrating catastrophe risk into capital adequacy standards to strengthen industry resilience.  

The Myanmar earthquake in March, with tremors felt in Bangkok, highlighted the region’s underestimated cat exposure. The OIC is using this as a case study to launch three phased actions this year,  to improve awareness and readiness. 

Taken together, these changes reflect Southeast Asia’s steady progress towards more robust, riskbased oversight. 

“While these changes create immediate operational and financial challenges, they are fundamentally designed to enhance the stability and sustainability of Southeast Asia’s insurance sector,” Miow noted. 

“Stronger capital positions mean greater protection for policyholders and a more resilient foundation for the industry’s continued development.” 

Strategic levers

In the emerging regulatory environment, simply meeting minimum capital requirements is not enough, according to Miow. 

“The ability to effectively manage capital and optimise balance sheets has become a powerful differentiator. Insurers that can adapt quickly to new rules and deploy capital efficiently will be best positioned to capture emerging opportunities as the market evolves,” she added. 

“Peak Re believes that regulatory change is not just about compliance, but also about using capital management strategically to foster growth. For example, as consolidation accelerates, we work closely with clients to design bespoke reinsurance solutions and structured transactions that ease capital constraints, support M&A, and facilitate portfolio optimisation.” 

For smaller players, this might mean finding the right partner or investor; for larger insurers, it could involve innovative capital solutions, she explained. 

Building scale  

One of the most immediate consequences of rising capital requirements is industry consolidation.  

“This environment, while challenging, creates opportunities for stronger players to build scale, diversify risk, and enhance operational efficiency through well-executed mergers, acquisitions, or strategic partnerships,” Miow said. 

“The current wave of regulatory change is not an obstacle, but a springboard for transformation. Insurers and reinsurers who approach compliance as the foundation for innovation and long-term growth will be best positioned to shape the region’s future,”  

“At Peak Re, our strength lies in our diverse team of regional experts with a global perspective,” she added. “Working across markets with unique dynamics allows us to better understand clients’ evolving needs.” 

The reinsurer’s approach, Miow said, centres on three pillars: bespoke reinsurance structures that optimise clients’ capital positions; local expertise that reflects market nuances, and agile support that ensures capital is deployed where it creates the most value. 

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China, India and Indonesia face significant health and mortality protection shortfalls given large populations and rapid economic growth, while natural catastrophe protection gaps for the region are estimated at over 90%, among the highest globally.

“The protection gaps are also widening,” according to Jasmine Miow, head of South Asia and Southeast Asia markets at Peak Re.

“Changing lifestyles, ageing populations, climate change, medical inflation and a rise in emerging threats like digital and cyber risks are altering the risk landscape and introducing new vulnerabilities.

“Closing the protection gaps in Emerging Asia represents a vital opportunity not only for insurers, but also for governments, policymakers, and society at large in order to enhance financial security and build resilient communities prepared for the challenges of the future.”

A Peak Re survey of 8,000 middle-class consumers across seven emerging markets finds a significant mismatch between the middle- class consumers’ perception about their protection gaps, versus industry estimates.

On average, consumers perceive smaller protection gaps than those estimated by the insurance industry.

“Health and mortality gaps are better understood by consumers, though still underestimated,” Miow said.

“Despite being aware of risks, many middle-class consumers feel that insurance is either unaffordable, unnecessary, or too complex, leaving them vulnerable to financial shocks.”

The mismatch reflects gaps in consumers’ risk awareness, or in the understanding of the need for protection and/or of the adequacy and scope of their existing coverage.

“In the Philippines, standard policies often exclude floods and earthquakes, while those in Malaysia exclude specific perils like earthquakes, requiring expensive add-ons,” according to Miow.

Shifting landscape

Optimism about economic future affects the perception of protection gaps. India and Vietnam, where individuals are the most optimistic about their financial future, reported the smallest perceived protection gaps.

“In India, two emerging risks are climate change and cyber risks,” said Sudhir Salian, head of India and Middle East markets.

“India ranks sixth in the global climate risk index for climate vulnerability, and with the advanced development of the Unified Payment Interface based financial ecosystem, high digital penetration and the pervasiveness of digital transactions exposes the market to unprecedented cyber risks.”

The survey showed that 43% of middle-class consumers expect climate change to significantly impact their life over the next three years.

It has shifted from a distant environmental issue to an immediate and personal economic threat for many.

Miow noted: “The saying, ‘we escaped poverty, only to be chased by the rising tide’, captures the profound existential anxiety of Vietnam’s middle class, framing climate change as a direct threat to their hard-won socioeconomic progress.”

Floods and heatwaves are the top extreme weather concerns in the region, but significant regional variability is seen, where consumers in the Philippines are the most concerned about typhoons, and droughts rank high in Vietnam.

“It is seen as a force that could reverse decades of national and personal economic progress,” according to Miow.

Insurance engagement

Encouragingly, insurance remains the primary tool for consumers looking to close these protection gaps, according to the survey.

This is especially the case in Indonesia and India, where the willingness to purchase insurance is the highest.

Salian said: “The perceptions of low protection gaps indicate the immense potential for insurance from engaging with consumers through targeted education and understanding their unique risk protection needs.”

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