Competition will heat up in the Asia-Pacific region as more countries liberalise rules on foreign investment and encourage new business, EY forecasts.

“For example, in India the government has taken steps to liberalise the insurance sector, which has led to a wave of mergers and acquisitions that will continue into [this year],” the professional services consultant says in its annual insurance outlook for the region.

Increased price competition is expected to force cost cuts in changing markets, with companies in China and Malaysia now permitted to set their own rates for motor insurance.

Healthy economic growth and rising disposable incomes will continue driving demand in markets such as China, India, Hong Kong, Singapore, Malaysia, Indonesia and Thailand.

The possible impact of policies pursued by US President Donald Trump is uncertain.

Withdrawal from the Trans-Pacific Partnership and the possibility of trade tariffs on China could dampen trade and growth and trigger currency volatility, EY says.

On the other hand, Mr Trump’s plans to cut taxes and roll back regulation in the US may improve market conditions.

Growing demand for technology-driven solutions is forecast to push insurers to enhance digital capabilities.

“With almost two-thirds of the vast population of Asia-Pacific now using smartphones, insurtech is expected to grow quickly… building on the foundation established [last year].”

The regulatory environment is also changing, with China and Association of Southeast Asian Nations member states moving towards greater regulatory consistency.

EY says agility is crucial for insurers in the fast-evolving environment. “This poses challenges for an industry that in the past has been slow to change.”

Insurance priorities for this year should include putting customers at the centre of strategy and driving performance through digital innovation. Companies also need to reassess future strategies and prepare for widespread regulatory change, the report says.