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EC News: Asia Edition (28th February 2017)

  • Publish Date: Posted about 7 years ago

MAS to help financial sector get ready for the Future Economy

The central bank of Singapore, MAS, has published a number of specific measures to build technology infrastructure to drive innovation. The goal is to position the financial services industry, including the insurance sector, for the “Future Economy”. Within insurance MAS has said it will build data infrastructure for natural catastrophe and cyber risk insurance. The Natural Catastrophe Data Analytics Exchange is looking to widen the availability of high-quality data on catastrophes in Asia by pooling industry loss data and collecting economic data through remote sensing technologies. This improved data will ensure catastrophe insurance penetration in the region is increased. The Cyber Risk Management Project aims to develop industry-wide cyber risk definitions, databases and models to better quantify cyber risks. This will speed up the growth of cyber risk insurance in Singapore and across Asia. Developing an industry Know-Your-Customer (KYC) utility is another area of exploration. This is a critical process for the financial services industry worldwide, but has become increasingly costly and resource intensive.


10% growth for Singapore’s life insurance industry in 2016

Singapore's life insurance industry grew by 10% to S$3.29 billion for 2016, boosted by a strong Q4 sales performance. The strong performance is mirrored in the increase in the total sum assured for new business which rose by 15% to S$117 billion. Weighted single premium product sales jumped 9% to S$1.03 billion, strengthened by a 15% growth in non-linked products, such as term, whole life and savings plans, to S$799 million. For the final quarter of 2016, total weighted new business premiums rose to S$955.3 million, up 15% on the quarter before. This was fuelled by a robust growth of 20% in annual premium sales to S$661.1 million whilst weighted single premium products registered a 4% increase to S$294.2 million.


Insurance CEOs most affected by disruption, but they embrace it according to PwC

Insurance CEOs are more worried about a range of threats to their growth prospects from over-regulation, the speed of technological change, changing customer behaviour and competition from new entrants compared to other sectors. PwC did say however that while disruptive change has the biggest impact on Insurers, many remain confident of growing revenue over the next year and are among the most keen to embrace disruption. Even though the sector is experiencing soft premium rates, low interest rates and subdued economic growth in a number of developed markets, insurance CEOs are optimistic about their own companies’ growth prospects. 35% are very confident they will get high revenue growth over 2017 and over 80% said they were somewhat confident. However, insurance CEOs are also aware of the disruption and change in the industry, the transformational impact which is now evident in areas ranging from robo-advice to pay-as-you-go and sensor-based coverage. Concerns over regulation, competition from new market entrants, the pace of technological change and especially shifting customer behaviour have risen again from their high levels in 2016.


IAG sets up InsurTech hub

IAG is establishing an InsurTech hub in Singapore, the first Australian insurer to create such a centre in the country. The hub will serve as an incubator for IAG to work with Asian-based start-ups and research and technology providers to develop customer-centric products and services. It has been reported that the hub will be called the Firemark Labs. IAG mentioned its decade-long relationship with the Singapore central bank, MAS and a regulatory regime that offers tax incentives and collaboration opportunities as some of the reasons for setting up the hub in Singapore. Julie Batch, chief customer officer at IAG, says that the insurer has had a long-term presence in Singapore, having established IAG Re Singapore in 2006. Batch said, "Singapore is recognised as having one of the most developed fintech landscapes with a growing InsurTech scene."


Vietnam’s non-life market has competitive outlook for 2017

Vietnam's general insurance market will remain competitive in 2017 as further rate reductions are expected over the year. A report by Aon Risk Solutions titled, "Asia Market Review 2017" reported the following findings: The health and benefit market is expected to yield further premium increases with 15-20% increases forecast. The impact of government initiatives to remove red tape, encourage investment and streamline the visa application process will support the construction and tourism sectors in 2017. With capital markets liberalised and barriers to investment removed, construction and infrastructure is likely to be a key focus area in 2017, with Japanese and Korean investment in power and infrastructure expected. The aftershocks of a US withdrawal from the proposed Trans-Pacific Partnership trade agreement will begin to show over the year. The geopolitical effects for Vietnam are thought to be larger than any economic fallout, which will be shielded by the number of other established trade partnerships in the region which Vietnam is part of. 2016 saw Vietnam’s new government administration unveil some of its new economic and financial policies, included an uplift in infrastructure spending as well as measures designed to encourage foreign direct investment and boost tourism.


Lloyd's strengthens Asian underwriting hub status

Lloyd's hosted Liam Fox, the UK’s Secretary of State for International Trade, at its underwriting platform in Singapore, to show how it has developed into Lloyd's largest operation outside London providing tailored risk solutions across the Asia Pacific region. Fox and Scott Wightman, the British High Commissioner to Singapore, met Kent Chaplin, CEO of Lloyd’s Asia Pacific, where they discussed the Lloyd’s growth story in Asia and how the British government and Lloyd’s can work together in the future. Key discussion points were further enhancement of trade in the region, how to reduce underinsurance and how to pioneer the development of the cyber insurance market in the region to mitigate against emerging cyber threats. This visit comes as part of Fox’s three-day visit to the city-state to meet with Singapore and British businesses, underlining Britain’s openness and commitment to free trade. Launched in 1999, the Lloyd’s Asia platform in Singapore is the gateway to the Asia Pacific for Lloyd’s. Its premium income has tripled since 2009 to reach US$618 million in 2015. Lloyd’s is the largest provider of off-shore reinsurance premium income in Singapore.


Former Direct Asia management establish Singapore insurtech firm with BGL parent

Simon Birch, the former managing director of Direct Asia, has formed Direct Budget, Auto & General's first South-east Asian venture with the support of BHL. The Monetary Authority of Singapore has only recently licenced the company which began trading as Budget Direct at the start of the year. The company promises to "make it easier, faster and cheaper to secure quality cover with savings of up to 15-20%, or more, on their premiums". Auto & General has been operational in the Australian market since the turn of the millennium. Budget Direct CEO Birch said, "We know Singaporeans are value conscious consumers. They are also active users of technology. By converging our value-based approach with leading technology, we hope our entry into the local market will see more consumers convert to purchasing insurance direct as they discover it isn't as complicated as they have been led to believe. Insurance isn't hard to understand, though this misconception keeps agents and brokers in business. Car insurance is based on known facts; everyone knows what sort of car they own, how they use it and who else used it, add any additional extras that they need and they're done with the ability to buy a policy in 10 minutes or less."


Chinese insurer’s $100bn spending spree to slow in 2017

A clampdown on speculation by insurers and new regulations on outbound capital flows is causing one of China’s most acquisitive industries to slow down. $100 billion of deals were done by Chinese insurers over the past three years but so far this year there hasn’t been a single acquisition. Anbang Insurance Group Co., Ping An Insurance (Group) Co. and China Life Insurance Co. were some of the largest spenders last year, purchasing assets ranging from a U.S. hotel chain to an auto website operator. The China Insurance Regulatory Commission has pledged to end exposure to systemic risks. At a briefing in Beijing on Wednesday, the chairman of China’s top insurance watchdog promised to control “drastic investments and blind acquisitions” by some insurers.

Malaysian Non-life insurance growth rate halved in 2016

Malaysian general insurance industry growth was reduced to 1.1% in 2016, with gross written premium income hitting MYR17.67 billion (US$3.97 billion). This was half the 2.2% growth rate achieved in the prior year period. Motor insurance was 0.8% up, maintaining its dominant share of the overall market at 46.2%. Fire insurance remains the second biggest class with a market share of 18.5% achieving a growth rate of 5.0% at MYR3.27 billion for the year. Medical and Health Insurance jumped 6.6% with gross written premiums reaching MYR1.03 billion. This is a change in fortunes from the 4.0% decline in 2015. The Miscellaneous Class comprising Bonds, Liabilities, Engineering and Workmen’s Compensation registered a 1.7% growth with gross written premiums reaching MYR2.35 billion. Marine Aviation and Transit insurance contracted by 7.8% with gross written premiums of MYR1.56 billion due in part to a reduction in demand for marine cargo and hull cover from the oil and gas sector. The Personal Accident class ended with a 0.2% reduction with gross written premiums of MYR1.30 billion. Overall the market was affected by weak consumer sentiments and sluggish external trade amidst growing uncertainties in the global environment.


Insurers watching Hong Kong directors’ ruling

Global insurers are watching a tribunal ruling in Hong Kong that would tip Asia’s market for company insurance coverage into the purple. Directors and officers insurance coverage protects firm leaders from some liabilities when an organisation is sued. A civil suit in Hong Kong brought by the Securities and Futures Commission in opposition to a Chinese state-backed conglomerate could impact the market for the insurance policies. The SFC pressed market misconduct expenses in opposition to Citic in 2014 for failing in 2008, when it was known as Citic Pacific, to reveal instantly billions of in losses on a foreign money hedge gone improper. A ruling on that case, which is searching for HK$1.9bn ($245m) from 5 firm administrators to compensate 500 traders is predicted in the primary quarter of the year. The case resembles a category motion suit and, if dominated in favour of the SFC, will deliver with it a better threat to insurance coverage for executives. “If the recent case sets a precedent and becomes a systemic risk, it may have a potential to reset the D & O pricing in this market,” mentioned Lei Yu, CEO for Hong Kong at insurance coverage dealer Marsh.


New head named for Zurich APAC commercial insurance

Zurich Insurance Group have merged two of its commercial insurance units in the Asia Pacific (APAC) region and appointed division heads. The company has joined its global corporate and commercial units to offer a single point of entry for commercial customers. Zurich APAC CEO Jack Howell, said, "This simpler structure provides our customers with a streamlined, tailored offering and brings the clarity of focus needed to target Zurich's global resources at the most important opportunities in Asia Pacific. I am confident we have the best talent and the right strategy in place to strengthen our regional business and to capitalise on the growth potential in the region." The new commercial insurance business in APAC will be led by Chris Waterman, who joined Zurich as chief underwriting officer, commercial for the region in 2016. He will report to Howell, and to CEO of Zurich's global commercial insurance business Jim Shea. Waterman said, "We are changing our go-to-market approach so we can provide customers and brokers with one single channel to access the tailored insurance and protection solutions they are looking for. With this new structure, we are also empowering each country with the authority and agility they need to make even faster decisions in response to their customer conversations."


Jeremy Young appointed Sun Life Financials chief marketing officer

Sun Life Financial has appointed Jeremy Young its chief marketing officer for Asia. Based in Hong Kong, Young will manage Sun Life's marketing, brand and the development of its client insights programme for the region. He reports to Roger Steel, president of new markets and business development. Through close partnership with seven other CMOs where Sun Life has a presence, he will focus on strengthening the delivery of client-centric solutions, driving the regional alignment and implementation of Sun Life’s brand and leading client and advisor programs. Young was most recently CMO of Sun Life Hong Kong.


Fabien Jeudy appointed by Sun Life as CEO

Sun Life Hong Kong's board of directors has named Fabien Jeudy as its new chief executive officer.  Jeudy will be responsible for managing and growing SLHK operations which include life & health insurance, wealth management and the pensions business. Jeudy has over 27 years of experience across Sun Life’s businesses in Hong Kong, Canada, the United States, Indonesia, the Philippines, India and Vietnam. Most recently, he was the regional chief operating officer for Sun Life Financial where he provided business oversight for a number of the company’s functional areas and product development across its operations in Asia.


Mark Johnson named as CEO of FP Marine Risks

Hyperion Insurance Group has appointed Mark Johnson as CEO of its Hong Kong headquartered specialty marine business; FP Marine Risks Ltd. They also revealed that with effect from 1 April 2017, FP Marine will become part of RKH Specialty, also part of Hyperion. Johnson, whose appointment is subject to regulatory approval, will take over from Richard Walker, who will return to his role as chairman of FP Marine after stepping into the CEO position last year. Johnson has over two decades of commercial experience in Asia. He was most recently CEO of JLT Thailand and prior to that, headed up AIG’s Commercial Lines division in Hong Kong and its major accounts practice in Asia.