The president and chief executive officer of Asia-Pacific for AIG Property Casualty has some difficult questions for his own organisation

Jose A Hernandez wants to know what AIG is doing to help the economies of Asia to deal with their ageing populations. And that’s not all. “How do we help the growing SME industries expand and move offshore?” he asks. “How do we help individuals in terms of protecting their assets so that they can take more risks?”

Hernandez believes that finding solutions to challenges such as these is central to his company’s mission to “grow with Asia”, where he says AIG is “about expanding the market, not just gaining market share”.

The man who oversees subsidiaries and related companies of AIG in Asia, including AIU Insurance Company, American Home Assurance Company and AIG Fuji Life, says that the true leaders in the insurance industry are the ones who know how to serve their customers and 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,” he adds.

Indeed, Hernandez rates local market knowledge as one of the most important elements of success. “Until you acquire that knowledge, [you must have] humility and a deep respect for local expertise,” he says. “As a chief executive, the key is being aware of the importance of the local knowledge and relationships and continuing to emphasise and foster them.”

For any insurance company to succeed in Asia-Pacific, it needs to ensure that it has a deep understanding of the markets in which it operates, Hernandez says. “In order to have that, the company needs to have been in the market for a very long time. This is something that makes success very hard for new market entrants, especially global players.”

Long relationship
Hernandez was assigned to the AIG Companies in Japan and Korea in 2003. During his tenure in Tokyo, he held several positions including executive vice-president of AIU Japan, the largest foreign general insurance company in the country. But he points out that AIG’s relationship with Asia began many years before then. “AIG started in China in 1919 and we built our business by deeply understanding every local marketplace in which we operate,” he says. “Understanding what clients really want, the regulatory environment and the culture is key to success, and that understanding is dependent upon the quality of the local relationships the company has.”

Hernandez, who joined the American International Group in 1994 as head of commercial lines and distribution in AIG Mexico, said the growing middle-market segment in Asia is providing the fuel for economic development and 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,” he says. “Also, I think Asian companies are aware that risk is becoming more global and it’s important to work with an insurer like AIG that has access to a very strong global network that knows how to handle very tailored and complex kinds of risks.”

He points to AIG’s expertise in the property, aerospace and energy sectors. “We also have many niche products in areas where we are the market leaders and we understand emerging risks, particularly in the cyber-risk environment,” he says. “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.”

Future risks
So what challenges lie ahead? Hernandez points out that “the sheer volume of new regulations” has given rise to several issues, such as, “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,” he says.

And they will no doubt create more questions that Hernandez will be encouraging his company to answer.