Round-up of the latest news and developments from the Asian insurance market with stories from AXA, QBE, JLT and more.
AXA Insurance Singapore has appointed Mr Jean Drouffe as its new CEO
AXA Insurance, Singapore has announced the appointment of Jean Drouffe as CEO.
Drouffe will be taking over the role from Ms Doina Palici-Chehab who has been promoted to interim regional CEO of AXA Asia, and will report to her.
Drouffe will be responsible for focussing on growing the business in Singapore with his job scope spanning the life, general insurance and health businesses locally.
Drouffe first joined the company in 2000 where he played an instrumental part in launching the AXA Group Risk Management practice through various roles in the Economic Capital project.
He has previously served as the CEO for the general insurance businesses at AXA Asia, during which he was based in Hong Kong. Prior to working in Hong Kong, he was director general for the western region at AXA France for over two years, and group finance director at AXA UK for more than three years. Before taking on the role as group finance director, he was the chief financial officer at AXA UK for over two years.
QBE appoints Kurinsky as new Malaysia CEO
QBE has appointed Chris Kurinsky to CEO, QBE Insurance Malaysia.
Bringing with him 20 years’ experience in the insurance industry, Kurinsky will be responsible for QBE’s business across Malaysia as he continues to drive the profitable growth in the country and increase the company’s share in specialty, commercial, SME and personal lines of business through strategic initiatives and partnerships.
Prior to joining QBE his most recent position was head of sales and direct marketing, consumer lines for Chubb Insurance, China. Before this, he was the general manager of consumer lines for Chubb Malaysia which provided him with an extensive knowledge of the Malaysian insurance market. Kurinsky also worked in mainland China, Malaysia, Thailand, Singapore, Hong Kong, United States and Latin America.
Commenting on the appointment, Mark Lingafelter, Managing Director, QBE Asia Pacific said "We are very pleased to welcome Chris to QBE. His previous experience in the Malaysian insurance sector and his expertise in underwriting, distribution, reinsurance, and strategic planning will help us continue to expand our solid customer base in this dynamic market. Chris is inheriting a strong business in Malaysia, which is an integral part of our Emerging Markets Division and remains a key part of our profitable growth strategy."
JLT Asia appoints Snowdon as head of risk and analytics
JLT Asia has announced the appointment of Kevin Snowdon as head of risk and analytics upon completion of his contractual obligations at his previous employer.
Snowdon is bringing with him over 30 years’ experience helping organisations consider risk in its broadest sense.
In his role, Snowdon will report to Warren Downey, CEO of JLT Specialty Asia.
Chubb appoints Gschossmann as new Singapore financial lines head
Chubb has appointed Johannes Gschossmann as head of financial lines portfolio in Singapore.
Gschossmann has been at Chubb since July 2016, reporting to Liam Burrell, the division head of property and casualty (P&C).
Prior to joining Chubb, he was part of Allianz where he looked after the same division for Singapore and South-East Asia.
With 10 years’ experience within the industry along with global experience, Gschossmann is expected to lead the day-to-day management of the portfolio, including all underwriting and market-related activities.
His responsibilities will include the development of products as well as underwriting measures to lead the company on the path to sustainable growth.
Country president at Chubb, Adam Clifford described Gschossmann’s portfolio as a critical part in crafting solutions tailored for market needs.
He said, with Gschossmann’s proven track record, he is confident the financial lines portfolio will achieve new heights.
China’s PICC group to acquire ASEAN insurers
PICC Group, a Chinese non-life insurance giant, is discussing whether to acquire or buy a stake in several Southeast Asian insurers.
The Vice President of the company, Mr Xie Yiqun, saying that he expects a couple of deals to occur by the end of this year, with a few more to come in the next two or three years.
The overseas push by PICC Group is in line with Chinas Belt and Road initiative, which is directed at building a modern day ‘Silk Road’ connecting China by land and sea to Southeast, South and Central Asia and beyond to the Middle East, Europe and Africa.
Mr Xie said “Insurance regulations vary from country to country,”
We have a map (of target markets). Our progress in each country varies as each has a different level of openness.”
Thomas Reuters data has shown that Chinese outbound deals are declining due to the increased scrutiny by Bejing. However, the M&A deals by Chinese companies in Belt and Road countries have increased dramatically with investment for 2017 hitting $33bn by mid-August.
Executives for the insurer also said it was using Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect schemes as a new channel for investment and had spent CNY8bn (US$1.2bn) to CNY10bnn on that in the first half of this year.
Increase in regulatory scrutiny on financial sector cyber risks
Regulators across APAC are improving their supervisory capabilities in order to tackle cyber risk, with an increased number of cyber-attacks and date breaches along with the major threat caused to the financial system when this occurs, a report from Deloitte said.
The “Cyber regulation in Asia Pacific” report provided an overview of recent regulations relating to cyber risk in seven jurisdictions—China, Hong Kong, South Korea, Japan, Singapore, Australia and India.
The report noted that the regulatory trend in many parts of APAC and among supranational regulators is to cyber resilience. This approach accepts the inevitability of cyber-attacks, and instead, places focus on strengthening resilience by building holistic and dynamic enterprise-wide cyber risk programmes, securing perimeters and staying vigilant for emerging threats.
As well as this, the focus is also on industry and regulators collaborating to further develop cyber skills and expertise, foster common standards and approaches and support information sharing and facilitating coordinated responses to incidents and attacks.
The report highlighted three main challenges faced by APAC financial institutions (FI).
One of the main challenges is the FIs’ extensive interconnections and interdependence regionally, such as through the SWIFT interbank network and similar software used across the FIs. This means that any weakness in one FI could compromise others.
Secondly, although cyber threats cut across borders, cyber security regulation in the APAC region remains fractured and localised, with no significant moves toward harmonisation, a consequence of the diverse political, economic and socio-cultural background and different technological capabilities.
Thirdly, the report called out the generally lacking human resources capabilities. Organisations have a shortage of dedicated IT security professionals, which means they may have difficulty keeping up with changes in the cyber landscape. Many FIs lack management recognition of the importance of cyber security and fail to adopt a coordinated approach across functions.
The report provides an insight into firms developing a framework for overcoming these challenges and for strengthening cyber resilience, including keeping the board and executive level involved in cyber risk management, conducting regular vulnerability assessments and penetration testing and regularly engaging externally with peers and regulators to encourage information sharing, cooperative and coordinated responses and the development of harmonised standards.
Mr Kevin Nixon, Global & Asia-Pacific Leader, Centre for Regulatory Strategy, Deloitte said: "As financial institutions become more data-driven digital businesses and more financial services are delivered online, cyber risks are increasing. If these cyber risks and responses are not well managed, they could threaten the stability of the financial system.
“We believe that this means only those financial institutions with robust cyber security and cyber risk management will be able to maintain trust and enhance their competitive edge to retain customers."
13 insurers in block chain cooperation in India
Thirteen Indian insurance companies have come together to use a block chain-like technology in order to create a central repository of policy holder data. This will avoid them having to repeat the registration procedure for holders of multiple policies.
When speaking to Business Standard, Akshay Dhanak the Vice President of Business Systems & Technology at HDFC Life Insurance said: “When the same records are available to a number of life insurance companies in a chain, the cost incurred by them is lower compared to what it is when they were all separately conducting tests and storing records,”
A lot of work has to be done in know-your-customer, medical underwriting, financial underwriting, etc, when a customer buys insurance, he said. Duplication of these procedures can be prevented by having the entire data set on block chain.
EY, a global advisory firm, will be facilitating the Indian consortium through tie ups with multiple technology partners. Sachin Seth, technology partner at EY said: “We are using multiple platforms like Hyper Ledger, MultiChain and Corda, among others. Each platform has its own benefits and limitations in terms of volume of transactions that they can handle and interoperability (that they offer),”
COO at IndiaFirst Life Insurance, Mr Mohit Rochlani, said that interoperability with other insurance companies — apart from banks, medical centres, among others — would be the eventual goal.
He indicated that any collaboration across industries constitutes data sharing as well as process sharing. There are regulatory concerns regarding data privacy that need to be addressed. Once the system develops, he said, it would help in decreasing cost and improving efficiency.
The savings in financial overheads due to the new technology are yet to be seen. But the consortium members are confident that greater transparency and reduced duplication would be beneficial for everyone involved.
KPMG has noted that one of the most disruptive applications of blockchain would be the development of “smart contracts”, which would streamline verification and authentication of details across all member parties simultaneously and would reduce costs.
Pension fund eyes stakes in several foreign owned insurers in Malaysia
Kumpulan Wang Persaraan (KWAP), the second largest pension fund in Malaysia, has narrowed down its investment options among foreign-owned insurance companies who have to decrease their stakes in their Malaysian business in order to comply with foreign ownership limits.
Chief Executive of KWAP, Wan Kamaruzaman Wan Ahmad said: "We are at the point of appointing an investment bank as our advisor... (The companies are) the big ones, Great Eastern, Prudential and AIA,"
KWAP could also partner with other institutional investors as the percentage of shares to be disposed of by the insurance companies is relatively big.
"It (stake acquisition) depends on valuation. It might not be us alone actually... We might also be looking at partnering with institutional investors—maybe not just one; maybe two or three, but it depends, because the stake is quite sizeable and there is so many around.
"Because of that reason, we might not necessarily buy one ourselves; but we might buy smaller stakes (in these companies), let’s say 10%, 10%, 10% (respectively, in these companies)," he told Bernama News Agency.
A final decision will be made by KWAP after the vetting of the insurers is finalised. The results of the selection are expected to be released by year-end, he added.
Bank Negara Malaysia has instructed foreign insurers, namely Tokio Marine Holdings, AIA, Great Eastern Holdings and Prudential to comply with the foreign ownership rule which requires overseas insurers to increase local shareholdings to at least 30 percent.
The overseas firms have until June 2018 to comply with the rule. They must complete negotiations for the divestment with targeted parties before the end of the year, and should those talks fail to materialise, they must list their businesses on the local stock exchange.
Investment income lifts China Life profits
China Life Insurance’s net profit has risen by 17.8 percent in the first six months of the year, due to a strong performance in the investment income sector.
The company said in a statement that the nation’s second largest insurer by market value reported a profit of Rmb12.242bn (US$1.83bn) during the period with total investment income growing 11.45 percent to Rmb56.66bn.
The performance highlights a trend in China’s insurance sector which sees companies achieving stronger profits from their returns on investments.
During the first half of the year, the entire industry’s overall earnings rose 10 percent to Rmb116.1bn, according to the country’s top insurance regulator.
Still, the government crackdown on leverage may soon bring headwinds to the sector, already leading to the chief insurance regulator being probed for graft and others being reprimanded for acquisitions abroad.
Tokio Marine to review each region’s earthquake risks
Tokio Marine, a leading general insurer in Japan, has started to review their earthquake insurance policies by carrying out a reassessment of damage risks for each region of the quake-prone country.
By January 2018, Tokio Marine & Nichido Fire Insurance will raise premiums for several areas, including the Shikoku region, which could be damaged by an expected powerful earthquake and the accompanying tsunami along the Nankai Trough off central Japan’s Pacific coast. The insurer will continue to monitor the Sagami Trough off Kanagawa Prefecture.
Earthquake insurance premiums are set to increase by up to 50 percent in Tokushima, Kochi, Ehime, Wakayama, Ibaraki, Shizuoka, and Kagawa prefectures. However, premiums are set to decrease for several areas in the Tohoku, Hokuriku, Chugoku, and Kyushu regions, reports the Japan Times.
According to the insurer, the nationwide average earthquake insurance premium rate will remain mostly unchanged after the review. Several areas’ premiums will have no change to their policy, including heavily populated Tokyo and Osaka prefectures.
One of its competitors, Sompo Japan Nipponkoa Insurance, had already revised its premium classification groups in February. Instead of classifying risks by the 78 prefectures, it divided the country into 948 areas based on postal codes. Premiums for coastal areas were increased due to tsunami risks, while inland areas’ premiums were reduced.
Typhoon Hato expected to have moderate impact on insurers' earnings
According to A.M. Best, rated nonlife insurers in Macau will be able to withstand the Typhoon Hato losses with moderate impact on earnings but limited effect on their financial strength.
Typhoon Hato made landfall just north of Macau, an Asian casino hub. The typhoon is the strongest storm in 53 years causing a huge amount of damage to the city from strong winds and flooding, as well as leaving major districts without electricity for at least 24 hours.
While it is too early to predict the total insured loss to the industry, A.M. Best is expecting the storm to have a limited rating impact, given their conservative reinsurance arrangements, low penetration of natural catastrophe coverage on personal lines and robust capitalisation.
It is expected that the majority of the gross losses will come from commercial property and business interruption losses. However, most of these risks are ceded to the international reinsurance market. Personal insurance awareness is very low, as only a single digit of motor policies are comprehensive policies according to Macau Insurers’ Association, and the vast majority of the residential property insurance are fire only policies that do not cover water damage and flood.
However, in Hong Kong, market analysts put the economic cost caused by Hato to the city at anywhere between HK$4bn (US$512mn) and HK$8bn. The stock market in the territory was paralysed, most businesses closed, flights cancelled and public transport suspended, reported South China Morning Post.
Philippine brokerage activities show modest rise
In 2016, the Philippines’ brokerage industry logged a modest rise in its activities, data from the Insurance Commission (IC) showed.
For last year, the premium income arising from brokerage activities reached P50.82bn (US$994 mn), representing an increase of 2.46 percent from 2015’s P50.82 bn.
The figure was obtained from the reports tendered by 62 insurance brokerage firms in the country.
Premium income accounted for 44.49 percent of the total P117.29bn generated by the entire insurance industry in 2016.
The commission identified the top five insurance brokers — which represented more than half of the brokerage sector’s total premium — as:BDO Insurance Brokers, AON Insurance and Reinsurance Brokers Philippines, Marsh Philippines, HSBC Insurance Brokers (Phils) and Jardine Lloyd Thompson Insurance Brokers.
In the same period, mediated premium income in life insurance stood at P7.88bn or 15.14 percent of the overall mediated premium by industry.