Australian life insurance premium growth will remain flat next year at less than 10%, according to a report from S&P Global Ratings.

The Japanese and Thai industries will show modest premium growth increases, while growth in China, Hong Kong and Taiwan will slow and Singapore will be static.

The Australian life industry’s return on assets will remain flat at 1%, and it is a similar story across Asia, with only Thailand showing a rise to a 2% return, the ratings agency says.

S&P says static returns are due to falling profits amid rising acquisition costs and the need for bigger loss provisions.

“Japanese insurers have shown a strong appetite for cross-border acquisitions to diversify their portfolio and source of earnings. While these assets provide diversification benefits, we consider the risk exposures will mount as insurers tread unfamiliar grounds.

“In our view, risk management on post-merger integration and complex business models becomes increasingly more important.”

S&P says there is growing demand for life products in Asia.

“The region’s rising population and growing affluent class will support demand for life insurance protection and savings options [next year], particularly in developing economies such as China and emerging Asia.”