New technologies create new opportunities

Emerging markets in Asia will develop differently from other markets, with new technologies sparking new types of coverage, David Flandro, global head of analytics at JLT Re told EAIC Today.

“For example, in Singapore you’ve got one of the world’s first full tests of driverless cars—and it looks to us as though countries in Asia are going to pioneer a lot of these emerging technologies,” he said.

“Korea was one of the first countries to introduce telematics, for example. There are a lot of opportunities for new types of coverage.”

Flandro added that certain developing Asian economies have the potential to adopt new technologies more quickly than some of the developed economies in Western Europe or the US because they do not have the legacy issues, systems and ways of doing business.

“They can adopt some of the new technologies very quickly—and this creates new types of risk coverage, so it’s a massive market with a huge amount of opportunity. Part of JLT’s heritage is in Hong Kong, so we are excited about it and hoping to continue to grow there.”

Asia is JLT Re’s fastest growing region, with the coverage gap creating a lot of room to expand reinsurance coverage.

“We are releasing a report for EAIC in Macau in which we studied several different countries including China and the Philippines,” he said. “We looked at the level of reinsurance penetration and the expected GDP growth.

“The Asian markets and many developing markets have slowed down slightly over the last couple of years; instead of GDP growth figures of 10 percent we are down in the sevens and sixes, but even at that rate, if we look at other countries that have grown economically in the past like Korea and Japan, we can see that there is likely going to be increased insurance penetration over the next 10 years and a lot of need for reinsurance.”

While several companies in emerging Asia do everything that any big insurance company would do in a developed economy, there are many companies that don’t—meaning that catastrophe modelling, reserve modelling, and predictive modelling are relatively untapped technologies in some Asia-Pacific firms.

“The application of these technologies to some of the new technology-driven insurance risks that are coming through in Asia is going to provide great opportunities for reinsurance cover,” said Flandro.