Asia-Pacific executives on opportunity, regulation and the future

Executives from some of the most important insurance companies in the Asia-Pacific region speak to StrategicRISK about some of the main challenges and opportunities for the region.

Which sectors present the most promising opportunities today?

Markel International (Singapore) managing director Matthew Cannock: These are as many and varied as the region itself but, in no particular order, accident and health and trade credit.

Lockton Companies (Singapore) chief executive Manan Sagar: Medical and life insurance – given the increasing medical costs in Asia and the low level of penetration. Reinsurance – significant increase in Asian market capacity. Non-conventional insurance products like cyber, intellectual property. Agriculture – given the very low market penetration. Multinational insurance programmes: regional and global HQs are increasingly being established in Singapore and Hong Kong.

JLT Asia chief executive Duncan Howorth: The strong economic growth in the region offers many opportunities; these arise from the growing demand for energy, from infrastructure investment and the growing need for healthcare and personal protection. I also see emerging opportunities, for example, in financial lines and intangible assets.

Allianz Global Corporate & Specialty Singapore chief executive Alexander Ankel: AGCS focuses on corporate and specialty business, covering more than 10 lines of business, so we cover the full spectrum of industrial sectors, each of which is interesting in its own way. But the biggest opportunity is geographical, rather than sector specific. As the Asian economy continues to grow, so do the opportunities to support Asian companies as they expand beyond their domestic markets.

AIG Property Casualty, Asia Pacific chief executive Jose Hernandez (Pictured): In the commercial arena, the growing middle-market segment – SMEs – are providing the fuel for economic development and they are starting to move cross-border in order to grow and be more competitive. This opens up new risks and AIG has some excellent solutions to help them manage this growth safely. In the consumer space, the opportunities in our region span from developing more mature offerings in accident and life insurance to more straightforward offerings such as compulsory auto, personal property and travel insurance. 

What one piece of regulation concerns you the most?

Matthew Cannock: We try not to get too concerned about the things that we cannot control, but regulation on company ownership in India is a big barrier to entry.

Manan Sagar: The inconsistency in regulations across Asia, resulting in significant variation in the products being offered in different markets, sometimes to the detriment of the customer, and places the onus on the customer to reconcile these variations with their commercial aims and pressures.

Duncan Howorth: There won’t be one piece. There is a focus by regulators across the region on capital strength which has impacts for insurers, and on remuneration disclosure, which has implications for intermediaries. Regulation offers opportunities to those who are not threatened, or who are in position to take advantage by it. These regulatory trends may lead to industry consolidation.

Alexander Ankel: AGCS supports strong and transparent regulations and governance. What is important to us is that there is a level playing field. The challenge is to help clients ensure they are fully compliant, and our network in many countries worldwide means that we have much experience of navigating this increasingly complex regulatory landscape. But we also understand that most regulation is there for a good reason, and is a fact of modern business life.

Jose Hernandez: It is not any one piece of regulation that concerns me, but the sheer volume of new regulations combined, which creates a number of issues: the rising costs of compliance; uncertainty about regulatory requirements, which has a big impact on the ability of the business to plan and move forward; and, as a multinational business, how we manage cross-border regulatory differences. These issues affect everyone in the community because they affect our ability to invest, compete, grow, create jobs and contribute to the economy in the countries in which we operate around the region.

What does the future of Asian insurance look like?

Matthew Cannock: The future is very bright. Local companies will become increasingly independent and look for much greater value from their commercial partners than pure capacity. The companies that are best able to respond to this challenge will be the most successful.

Manan Sagar: The significant growth potential being experienced across Asia while the corresponding insurance penetration continues to be low, presents a significant opportunity for the sector. The insurance sector will provide the bedrock for continued exponential growth by providing the society a transparent and efficient risk transfer mechanism. The continuing trends in de-regulation of the insurance sector will result in regionalisation of the insurance market, improved access to insurance capital, innovation in products and stabilisation of capacity and rates while the rise of the Asian MNCs and their need for sophisticated risk management, will result in insurance solutions designed from an Asian perspective.

Duncan Howorth: Asia offers many opportunities, but patience will be required. Access to markets and the right product strategy will be key to exploit these. But rarely does such a large opportunity present itself to the insurance industry. So the future looks like strong growth.

Alexander Ankel: I am optimistic. I expect that the role of the risk manager at corporate level in Asia will increase, supported by a growing awareness of the benefits of strategic risk management, especially in businesses which are expanding internationally. This can only be a positive move for both clients and insurers. I also believe there will be more diversification by geography and product offering our clients more than a comprehensive product range – it ensures stability and long-term consistency.

Jose Hernandez: It’s a landscape where the leaders in the industry will be the ones who know best how to serve their customers and who know best how to serve the growth of the local economies in which they operate. We seek to be aligned with both customer needs at a micro-level and also with the social-economic and infrastructure needs at a macro-level.