We asked six insurance experts what the biggest challenges and issues will be for the industry in the next 12 months. Cyber, connected objects and increased competition were all on the horizon

Scott Spaven, head of client and broker engagement, SE Asia, AIG Asia Pacific Insurance

Answer: The Internet of Things

Driven by the rise of connected objects, the latest industry revolution is the ‘Internet of Things’ (IoT). A decade ago there were about 500 million devices connected to the internet. Today, there are 10 billion to 20 billion. By 2020, it is estimated that there could be 40 billion to 50 billion, including everything from cups and pens to homes, cars and industrial equipment.

IoT kicks off a new economic era for the entire globe. The IoT economy will revolutionise the way businesses produce, function, and perform.

Research firm IDC’s IoT Market Forecast report in April 2015 estimates the size of IoT market in Asia Pacific, excluding Japan, will grow from US$250bn in 2013 to US$583bn in 2020. Meanwhile, according to Verizon’s Internet of Things report in 2014, China’s Ministry of Information and Technology set up a US$775m fund to support IoT build over the next five years, including the building of 10 IoT industrial parks in more than 100 core enterprises across the country by 2015.

While some business are realising the potential of IoT, concerns over privacy, cybersecurity, property and products liability will quickly become just as robust as the opportunities IoT presents. Businesses cannot afford to invest in their IoT systems without first understanding the major risks inherent in any system that is connected to the Internet.

The other IoT implementation is the pervasive networks within the physical space, such as the creation of “smart” cities combining elements from all urban stakeholders such as citizens, government and business. In South America, Asia, and Europe, all levels of government are identifying the potential benefits of building “smart” cities, and are working to unlock significant investment in that area.

The rise of IoT creates a massive influx of data. At the center of this new universe of data is the insurance industry, which has been using massive amounts of data to understand and mitigate risk. The insurance industry has been closely associated with Big Data. As IoT objects permeate all levels of our economy, it will be the insurers who are best placed to analyse this data and extract meaningful and actionable insights which could make our world a safer and more productive place.

Click here to read more about AIG’s white paper “The Internet of Things: Evolution or evolution?” For more information on AIG and its products and services visit www.aig.com


Douglas Ure, Marsh

Douglas Ure, practice leader, Marsh Risk Consulting Asia

Answer: Varies by client and country

It is very difficult to pinpoint the biggest one issue for the industry or clients. We operate in a world with complex risk issues and the challenges can be very different, depending on individual exposures and geographical presence. For example, a reducing oil price benefits some industries and negatively impacts others. The same is true for a strengthening US dollar depending on geographical footprint.

The World Economic Forum Global Risks Report, for the first time in 2015, discussed near-term risk issues over the next 18 months compared to longer-term risk issues over a 10 year time horizon. In the near-term, inter-state conflicts ranked highest and there were also concerns with terrorism, state collapse, as well as cyber risk — which was both short-term and longer-term concern. In the top 10 was also a rapid and massive spread of infectious diseases which is obviously high on the risk agenda with Ebola and the recent outbreak of MERS in South Korea. Such events cannot be prevented, but organisations can put in place processes and responses to make them more resilient.

The quantification and management of some of the more complex risk areas is something that risk managers and c-suite regularly need support with. This includes cyber risk, understanding risks in supply chain, quantifying business interruption risk and dealing with Mother Nature and the consequences of natural catastrophes in this part of the world. A major cyber risk event is one area that keeps many of us in the risk management profession awake at night and is an issue that, in my view, is significantly underestimated and the business implications are not understood as well as they should be.

A common challenge is having risk management prioritised as a board room issue. Aligning risk management to strategic planning, investing in strategies that make organizations more resilient and able to effectively respond to the complex and uncertain risk events should ultimately be the objective for risk managers and importantly be driven from the top. This is evolving and improving but unfortunately it has got a long way to go.


Keith Thomas, chief executive, APAC, Global Corporate business, Zurich

Answer: cyber

Cyber risk continues to be a substantial and growing issue in Asia. Businesses are increasingly interconnected, whether that is through the Cloud, the products they are manufacturing, or corporate ID. Around that there are some differing views on what is ’allowable’ from a State perspective versus private industry.

There are a lot of aspects that companies need to focus on inhouse. Such as, what are they doing in terms of response plans when using an internet and digital-based supply chain? If you are operating on the Cloud, what is the Cloud dependant on? Whether that is energy service, or hardware. Is there a concentration of people to give you optionality when something goes down? This should all be a boardroom-level discussion.

Taking a very broad-brush view, as markets are different in Asia’s various countries, the challenge the region confronts is that much of the cyber risk process is viewed as a cost issue. But if you handle cyber risk right — much like if a sophisticated risk management approach on property resilience for flood or quake — then cyber risk is a competitive and strategic advantage for the business. This is because businesses are more resilient and better able to quickly bounce back from a breach as you do not lose connectivity and go down as severely, as your competitor.

Some companies never fully recover from a cyber breach. There are companies who have had major cyber breaches where the company has seen massive sales drops, mainly due to trust issues from consumers. Better cyber risk management is a big mind shift for many companies in Asia.

In terms of the awareness of cyber risk in Asia, there are two camps. There are some companies acutely aware and others who are much less risk aware and concerned about cyber risk, while there are others who believe cyber risk is an “issue for someone else”. Some companies have not done enough due diligence around cyber risk, for example looking at the cyber risks which could come from working with a certain supplier.


Jane Drummond, Aon

Jane Drummond, 
regional head of sales and marketing, Asia, 

Answer: Increased competition

As Asia continues to be the world’s top recipient of foreign direct investment (FDI), accounting for nearly 30% of global FDI inflows — almost US$400bn in 2013 — the biggest challenge for clients in Asia is ‘increased competition’ brought about by globalisation.

This is supported by the findings of Aon’s 2015 Global Risk Management survey, where more than 1,400 risk decision-makers consider increasing competition as the fourth highest risk facing their organisation. Among Asian firms that were surveyed, the risk is rated as number one and, by 2018, the risk is projected to top the list globally.

Meanwhile, reported readiness for increasing competition dropped from 65% in 2013 to 49% in 2015. Additionally, about 49% of respondents to the survey have indicated a loss of income due to this risk in the past 12 months.

In parts of Asia, businesses that traditionally received state subsidies are now losing the edge. With the opening of borders to trade and foreign investment, globalisation brings opportunities and pressures for domestic firms to innovate and improve their competitive position. In addition, excessive labour capacities, easy entries, and risk maturity of multinationals have increased competition in the region.

While larger businesses may be able to fend off higher amounts of competition than smaller ones with limited resources, all organisations, regardless of size, see competition as a priority risk.

Managing competition risk demands a high-level, enterprise-wide approach that includes:

  • Utilising data driven insights to identify and understand new competitors entering the marketplace;

  • Scanning for emerging risks that may have an impact on your business and/or competitors;

  • Discovering the latest consumer trends and developing the requisite flexibility to adapt and respond to those trends;

  • Staying abreast of technological advancements to ensure that businesses are integrating the most effective techniques and technologies available; and

  • Understanding globalisation, including the entry of lower-cost economies into the global marketplace.

Preparing for aggressive action on the part of competitors, such as price wars.

For more insights from the 2015 global risk management survey visit http://www.aon.com/2015GlobalRisk


Dev misra swiss re

Devpriya Misra, vice president, credit and surety, Swiss Re Corporate Solutions

Answer: De-globalisation, super natural catastrophes, the IoT and the ’great monetary experiment

One of the key challenges every industry faces, in almost every market, is the rapid pace of change. Today’s risk landscape is changing faster than ever before due to new economic, technological, socio-political, regulatory and environmental developments, growing interdependencies, evolving liability and regulatory regimes, strengthening stakeholder expectations and shifting risk perceptions. This gives rise to emerging risks.

Emerging risk management is an integral part of Swiss Re’s Enterprise Risk Management (ERM) framework. Each year, our ERM team produces SONAR, Swiss Re’s emerging risk management framework. SONAR stands for “systematic observation of notions associated with risks”. Its purpose is to detect early signals of emerging risks.

The Swiss Re SONAR report presents insights on 21 emerging risk topics, drawing on all areas of insurance. Many topics could have cascading effects across areas and lines of business. This year’s report identifies four emerging risks with the highest potential impact: 

  • de-globalisation;

  • super natural catastrophes;

  • the “great monetary experiment”; and

  • the challenge of the Internet of Things.

Key drivers of the changing risk landscape are new economic, technological, socio-political and environmental developments as well as growing interdependencies.

As the World Economic Forum’s 2015 Global Risks report notes, mitigating global risks will require diverse groups of stakeholders to work together to solve the interconnected challenges posed by potential risks to social stability. The earlier the industry starts adapting to emerging risks, the better prepared it will be for future exposures and opportunities. There is no silver bullet that will work in all cases — but sharing knowledge is a good first step to prepare for what might lie ahead.



Mark newman xl catlin

Mark Newman, head of Asia and deputy chief executive Asia Pacific Insurance
, XL Catlin

Answer: Effective communication

Rapid changes in technology and the proliferation of social media tools have changed how we conduct business and interact with our clients. In our personal and corporate lives, we are inundated with information, communication and opinions.

How a company manages communications with key stakeholders is critical for its brand and reputation, and this will continue to be an increasing challenge for companies, and especially so for the industry and market leaders.

In recent years, across Asia Pacific, we have seen food and beverage companies, airlines, motor manufacturers and even insurers faced with the challenge of responding to a crisis, a recall, a disaster or a loss of data. Their performances in management and mitigation have varied enormously, with outcomes determined by the level of resources put into risk measurement and contingency planning.

XL Catlin is not immune to this attention either. As we joined operations, our priority was to present an integrated underwriting team across the world and enable trading on day one without impacting our broker or client service levels. Being ready for that day, admittedly a known and forecast event, made a huge difference to our launch perception by brokers.

The new XL Catlin brand is a reflection of how we think about risks and our approach to it — collaborating with our clients and broker partners to help them navigate the complex risks issues we face today.

In June, XL Catlin launched Response XL Catlin — a 24/7 crisis network in Asia staffed by a network of expert crisis consultants to provide best practice advice in risk prevention, recall planning and crisis response. The offering enables clients to prepare and manage crises such as product contamination or extortion situations and mitigate potential damage to reputation, market share and brand.