A dynamic time for risk in Asia: Aon
Technology, regulatory change and a desire to close the protection gap are the biggest factors shaping the risk transfer landscape across Asia, says George Attard of Aon’s Reinsurance Solutions business.
“There is increasing harmonisation of the regulatory framework across the region with a shift toward risk-based capital requirements.”
Where do you see growth potential in Asia?
The top 10 Asian P&C markets in gross written premium are China, Japan, South Korea, India, Thailand, Malaysia, Indonesia, Taiwan, Hong Kong, and Singapore. In some of the more developing markets, economic expansion is resulting in a growing middle class and increasing the appetite for buying insurance. We are starting to see this organic growth reflected in the underlying portfolios with personal lines property expected to play an increasing part over time.
When we look at specific lines of business there are some common themes across the region. Changes in government policy across the region is resulting in a strong push on infrastructure, for example. This is generating larger demand for risk transfer.
Opportunities also exist in new product development and distribution (eg, cyber, specialty casualty, health), reinsurance of agriculture and life portfolios, integrated treaty and fac solutions including fac facilities and increasing interest in closing the protection gap through public-private partnerships.
How does the demand for cover differ in different markets?
Mature markets are looking at new ways to grow through the introduction of new products, technology and digitisation and while underlying organic growth is driving demand in emerging markets, the local insurers are also looking for innovative ways to grow their portfolios.
How is regulation affecting the market?
The ASEAN Economic Community (AEC) established in 2015 intends to open up cross-border business including financial services. We are seeing some further liberalisation in the insurance sector and increased underwriting on a regional basis beyond those global or regional companies with a regional presence.
Eight of the 10 member states have already fully or substantially liberalised cross-border supply of reinsurance. Cross-border business may offer an opportunity for further expansion.
Companies looking for alternative avenues for growth may decide to write inwards business from other territories but many of the domestic firms are still focusing on the local markets.
There is increasing harmonisation of the regulatory framework across the region with a shift towards risk-based capital requirements.
What are insurers doing to close the protection gap?
There is increasing interest in closing the protection gap through government pools, public-private partnerships and other risk financing mechanisms. The re/insurance industry is well placed to provide risk management expertise and leveraging global re/insurance capital in a cost-effective manner to alleviate the costs of the protection gap partnering with governments to provide support to a mechanism such as a catastrophe pool for the local economy.
We are involved in a number of existing pools and numerous discussions to establish risk financing mechanisms addressing catastrophe, terrorism and other types of risk.
The opportunity is significant, but time is required to partner with governments, build the processes and align key stakeholders to buy into and implement these risk financing mechanisms.
At the same time, microinsurance is leveraging technology through collaboration with telecommunication firms, enabling access to populations in remote areas using mobile networks.
How is technology changing the insurance sector in Asia?
We are observing an increased move to digitisation and insurtech partnerships—the focus is primarily on distribution mechanisms, making distribution and customer access easier online and mobile. However, this is not limited to distribution but features across the value chain, from distribution to binding the policy, the documentation, right through to the claims management and administrative processes, enhancing the customer experience and driving operational efficiency.
We are also seeing some technology companies with data analytics capabilities coming in and looking at combining proprietary client data with external publicly available data and artificial technology to develop marketing leverage. Technology helps identify the particular risk appetite of clients and offer the product they are likely to be interested in.
George Attard is chief executive officer, Asia for Aon’s Reinsurance Solutions business. He can be contacted at:
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