Insurance industry’s ‘reliance on history’ sees it falling behind rapid APAC growth, says region’s newest Geneva Association member.
John Tan is a man who performs many roles. He is the group chief executive of ACR Capital Holdings (ACR), parent company of the Shanghai-based risk consultancy Asia Risk-Tech and the reinsurance firm, Asia Capital Re. He also sits on the boards of ACR’s joint ventures, Asia Capital Reinsurance Malaysia and ACR Retakaful Holdings. Last month, Tan added to his responsibilities by accepting an invitation to become a member of the Geneva Association, an international think-tank for strategic insurance and risk-management issues.
Tan said that it was an honour to be part of a 40-year-old organisation that was at the forefront of advancing the understanding and development of the global insurance and reinsurance industries. “The association is focused on major issues, which include all the emerging risks that come about because of climate change, globalisation, technology and so on,” he said.
The association’s secretary general, John H. Fitzpatrick, predicted that its Asian membership would continue to grow, “reflecting the increasing importance of the region’s insurance industry globally”. Nevertheless, Tan is still one of only a few Asian-based members of the association, a fact he said made it imperative that he worked to deepen the appreciation of Asia’s fundamental and strategic risk management, insurance and reinsurance issues within the organisation.
Top of the agenda were infectious disease and pandemic, as well as “increasing flood, typhoon and other extreme weather”, Tan said. “Of course, we have found through the Thai flood and Japanese earthquake that, in terms of manufacturing and logistics, [nat cat] is impacting losses around the world irrespective of where an event happens,” he added.
Singapore-based Tan said that the insurance industry was failing to keep up with the risks and challenges created by the massive growth of Asia. “From a product-management point of view, I don’t see the industry catching up because the changes here are moving very fast,” he said. “This industry relies a lot on history, so when the history is very short we are always behind. People are becoming more and more aware of the risks, but the product and pricing changes are not adapting fast enough.
“Asia is a developing part of the world that is growing very quickly, and getting some understanding of what has happened before, and what other people are doing, will hopefully help us to protect all the developments in Asia better.”
Tan said that risk management was still at a very early stage in many parts of the region, pointing out that there was an urgent need for education in this area, as well as a stronger focus on producing better risk surveys and risk-management reports. “Hopefully over the next few years, the market will pick up more on risk engineering, risk-management programmes, risk training and risk research,” he said. “Then there can be more frequent and meaningful discussions on risks, such as in the Geneva Association.”
Tan said that, to this end, Asia Risk-Tech was focusing on risk consulting, risk engineering and related services in the Greater China region. “Basically, it provides and helps the market and our clients to better understand the risks that are developing in China,” he explained. “Particularly, industrial risks and infrastructure risks. And we make sure that there are people imbued with the culture of risk awareness.
“Instead of underwriting purely in terms of supply and demand, which is often the case in China, we are trying to bring them to look at the risk perspective a lot more.”
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