Round-up of the latest news and developments from the Asian insurance market with stories regarding Allianz, Lloyd's, Aviva and more
Allianz and Standard Chartered Bank agree Asian insurance partnership
Bancassurance has become a key focus with several banks in Asia, fuelled by growth in the emerging markets and Asia’s rising insurance penetration rates. Standard Chartered Bank and Allianz have revealed a 15-year bancassurance partnership allowing the distribution of Allianz’s general insurance products, including travel, personal accident, fire and motor insurance products, to Standard Chartered’s Retail Banking clients in key markets across Asia. The agreement is applicable in Hong Kong, Singapore, Malaysia, Indonesia and China and will be phased in over 2017. Asia’s desire for non-life insurance is anticipated to grow at over 10% per annum over the next four years reaching a total of nearly $280 billion by 2020. As well as through Standard Chartered’s extensive branch network, Allianz products will also be available for distribution via a proprietary digital bancassurance platform for an integrated, data-driven and highly tailored customer proposition.
Final India approval given to Lloyd’s
Lloyd's has been given final "R3" approval from the Indian regulator to set up a branch in the country. Lloyd’s has said it plans to begin writing business in time for the April reinsurance renewals. The branch will be situated in Mumbai and will provide a variety of specialty reinsurance classes of business. Lloyd's chairman John Nelson dubbed the approval a "watershed moment" in the market's international strategy. Nelson said, "Lloyd's will help to share and develop expertise across the industry to position India as an international centre for insurance and reinsurance. A strong and diverse reinsurance market will de-risk the economy and enable its entrepreneurs and businesses to take risks and thrive. A local presence in India will bring Lloyd's closer to clients and risks enhancing understanding and the ability to develop new solutions for the needs of the Indian market with a particular focus on agriculture, infrastructure and disaster management." Lloyd's is the latest entity to be granted approval to operate in the country by the Insurance Regulatory and Development Authority of India (Irdai), following its approval of five global reinsurers last month. Munich Re, Swiss Re, Scor, Hannover Re and Reinsurance Group of America were all approved to set up offices as the Indian market continued its liberalisation programme.
Aviva creates new insurance company in Hong Kong with new partners
British insurance group Aviva, Chinese Internet giant Tencent Holdings and hedge fund Hillhouse Capital have combined to create an insurance company in Hong Kong, which will focus on digital insurance. Hillhouse and Tencent will acquire shares in Aviva Life Insurance, Aviva confirmed in a statement. Following completion of the transaction, Aviva and Hillhouse will each own 40% and Tencent 20% of Aviva Hong Kong. The agreement is subject to customary closing conditions, including regulatory approval. Aviva operates in Singapore, China, Indonesia, Hong Kong, Vietnam, Taiwan and India. The group has had a presence in Hong Kong for more than 150 years providing a full range of financial and insurance solutions for protection, investments, savings and retirement planning.
2017 to be a year of continued change for insurers
The Asia-Pacific insurance market will remain in transition this year, as the convergence of economic, technology, customer and regulatory forces remake the regional playing field, according to EY in its report "2017 Asia-Pacific insurance outlook". For a number of insurers, 2017 will be a year of continued change and strategic reassessment of core businesses and distribution channels. Strong growth and greater income levels will further fuel demand for insurance products and greater innovation. Advances in digital technology are raising customer expectations for innovative insurance products and digitally-enabled business models. At the same time, the regulatory landscape will continue to evolve as Asia-Pacific markets tighten capital requirements, adopt the OECD’s Common Reporting Standard and introduce regulations on consumer protection and cyber security.
Asia captive market is steadily growing
Aon’s Asia Market Review 2017 has stated that Asia is witnessing an unprecedented level of sophistication within captive owners. The fourth edition of the annual report on Asian insurance and risk trends showed that the majority of captive owners hold gross line captives seeking to manage and control external risk transfer costs as well as group retention costs, taking a ‘total cost of insurance’ risk approach to their risk-related decision making. The report highlighted that the Asian captive market has continued to grow during 2016 with 71 captives active in Singapore, 40 in Labuan, 18 in Micronesia and 3 in Hong Kong. Aon found trends of captive clients writing traditional lines such as property and liability risks, however, the region has also seen an increase in clients seeking to write non-traditional lines such as cyber risk, employee benefits, trade credit and environmental liability. Although there are signs of positive growth, uncertainties around tax strategies and reputational impact are still holding the region back. In an effort to address this issue, the Monetary Authority of Singapore has recently introduced the Organisation for Economic Co-operation and Development’s (OECD) base erosion and profit shifting standards.
Asean is a large potential market for reinsurers
ASEAN constitutes a large potential market for reinsurance products with over 600 million people, combined nominal GDP of over $2.41 trillion and per-capita income of $3,852. Asean has also set ambitious regional integration targets for 2015 and 2020. The Asean Economic Community (AEC) was established by the end of 2015. One of these aims is to set up a single market and production base by having a free flow of goods, services, investment, skilled labour and capital. Steps to achieve this include ending tariffs and nontariff barriers (NTBs), harmonising customs procedures via an Asean Single Window, harmonised technical regulations, removal of all restrictions on trade in services, continued liberalisation of financial services and strengthening investment protection via most-favoured nation (MFN) national treatment. Although some Asean nations have already committed to partially liberalise their insurance sectors by 2015, the exact forms of liberalisation and deregulation are still up for debate. Asean member-states plan to undertake a number of cooperative actions, which has the backing of the European business community, in the hope of achieving these goals by 2020.
China belt-road to impact on Singapore
China’s investments in ports and rail links in Malaysia under its belt-road regional economic expansion programme is likely to change the outlook for the island republic. The current mega belt-road projects in Malaysia, once completed, could alter trade routes in the region and this may see hundreds of billions worth of trade diverted from Singapore. Cargoes and goods within the region heading for China or vice versa could divert around the Port of Singapore, when China-funded ports and East Coast Rail Line (ECRL) in Peninsular Malaysia are completed. The double-track five-year ECRL project, due to begin this year, will connect ports on the east and west coasts of Peninsular Malaysia and will alter current regional trade routes, which ply between the busy Straits of Malacca and the South China Sea via Singapore. Presently, Singapore is in a strategic position along the east-west route. About 80% of the world’s maritime trade between east and west passes through the Straits of Malacca and the strait is the main shipping channel between the Indian Ocean and the Pacific Ocean linking major Asian economies such as India, China, Japan and South Korea.
P&C sector has a good outlook
China's P&C insurance risk outlook has been assessed as being low and only rises to intermediate for the life insurance sector, according to S&P Global Ratings. S&P's assessment mirrors China's moderate country risk, based on its view of the country's economic risk, political risk, financial system risk, payment culture and rule of law. In a statement, S&P said, “In our view, China's insurance sectors benefit from the country's robust economic growth potential. We expect China's economic growth to remain strong with real GDP growth of 6% or more annually through 2016-2018, however, the growth rate has been on a downward trend.” Referring to the Chinese P&C insurance sector, S&P outlined its reasons for its assessment of a low industry risk for the sector. “We view strong growth prospects and barriers to entry as positive factors, we consider the market's adequate ROE, product risk, and institutional framework as neutral factors. We expect the market to maintain good growth prospects and satisfactory earnings over the next two years.”
Eric Pooi hired by SCOR as new managing director for Asia-Pacific Hub
SCOR has hired Eric Pooi as managing director of the Asia-Pacific Hub, reporting to group chief operating officer Romain Launay. Pooi most recently served as chief operating officer of the Life division for Asia-Pacific. He replaces Ben Ho, who has been appointed Advisor to the managing director of the Asia-Pacific Hub. Pooi is a qualified Chartered Accountant who has been in the insurance industry for over 22 years, covering captive insurance, P&C reinsurance, composite and life reinsurance. Over the course of his career, he has taken on several roles ranging from CFO, COO, HR, IT and Administration. He is currently the appointed chief executive for SCOR Global Life Singapore Branch, as well as the chief representative for the SCOR Global Life Taipei Representative Office.
Berkshire Hathaway Specialty Insurance hires new Malaysian managers
Berkshire Hathaway Specialty Insurance Company (BHSI) has appointed Gaithrie Nandrajog as branch manager and Koo Kang Wuu as executive & professional lines and business development manager at its new office in Kuala Lumpur. This follows Labuan FSA's award of a license to BHSI to provide non-life reinsurance to the Malaysian market. Both have more than a decade of experience in the Malaysian insurance industry.
XL Catlin appoints marine risk engineer
XL Catlin’s insurance operation has appointed Jarek Klimczak to the role of marine risk engineer for Asia Pacific, to be based in Singapore. As marine risk engineer, Klimczak will be in charge of providing marine risk consulting for cargo, hull and machinery risks. He has 27 years’ experience, with extensive project cargo and project management expertise within the shipping and logistics industry, XL Catlin said in a statement. Prior to joining XL Catlin, Klimczak worked at Allianz Global corporate & specialty Singapore branch for some four years, where he was senior marine consultant. Before that, he worked at BBC Chartering in Singapore and Thorco Shipping in Germany as port captain.