Round-up of the latest news and developments from the Asian insurance market with stories from Tokio Marine Holdings, Aviva, HSBC Life and more.
Tokio Marine Holdings buys AIG medical stop-loss insurance business
Tokio Marine Holdings will acquire the medical stop-loss insurance business of AIG, the largest acquisition deal of a business division from a foreign peer.
The deal comes as the company continues its aggressive overseas offensive.
Tokio Marine will buy the business for just over JPY30bn (USD$266mn) via its U.S. subsidiary HCC Insurance Holdings, reported The Nikkei.
Medical stop-loss insurance covers claims above a certain cost for companies and organisations that fund their own employee insurance plans and is a common arrangement in the U.S.
Such specialty insurance products are HCC's strengths. Tokio Marine's premium income from US medical stop-loss coverage, including at HCC, grew 4 percent to around $1bn in 2016.
The market for such coverage is growing as medical advances send costs increasing rapidly. The business is the biggest source of premium income for HCC, which ranks fifth in the U.S. market for such operations and is likely to rise to third with the addition of AIG's operations.
In order to focus on its casualty insurance, AIG has shed businesses in recent years which led the group to seek a buyer for its medical stop-loss operations.
Tokio Marine has been more forceful than other Japanese nonlife insurers in expanding abroad. By strengthening its U.S. presence, Tokio Marine hopes to spread the risks it faces in disaster-prone and ageing Japan.
Drones help insurers speed up claim payouts in Japan
In an effort to enable quicker post-disaster payouts, the non-life insurance industry in Japan is increasingly using small unmanned drones to assess the damage suffered in disasters.
Sompo Japan Nipponkoa Insurance conducted drone assessments after heavy rain hit the northern part of Kyushu in July and handed out approximately JPY108mn (USD$959,600) in total insurance payouts, reported The Yomiuri Shimbun.
Two days after arriving, the insurance company’s loss adjusters completed its assessments, compared to previous disasters where it had often taken two weeks, according to the company.
Sompo Japan Nipponkoa is the first major Japanese non-life insurance company to have made payouts for natural disasters based on drone assessments. Similar efforts under way in the industry are expected to help rebuild disaster-hit areas as quickly as possible.
The challenge for the industry had previously been to address the delay in payouts in cases including small-scale fires and traffic accidents because adjusters were unable to visit disaster sites due to concerns over secondary disasters or trouble in conducting assessments, even if they visited sites.
The revised Civil Aeronautics Law, which came into force in 2015, prohibits drones from flying over densely populated districts.
However, Sompo Japan Nipponkoa received a permit from the Land, Infrastructure, Transport and Tourism Ministry in June 2016 to fly drones over densely populated districts across the country during disasters, enabling the insurance company to start operating a five-person drone unit in April this year.
After the heavy rain in northern Kyushu on 5 July, the company flew three camera-equipped drones on 12 and 13 July in the heavily damaged city of Asakura in Fukuoka Prefecture. They carried out an assessment from the sky of about 1,800 hectares in no-entry zones, according to the company.
Based on the video images, loss adjusters ascertained damage for six cases involving houses, shops and other insured properties and calculated the amount of compensation on the following day.
Aviva to quit Taiwanese market
Aviva is evacuating the Taiwanese market after agreeing to dispose of its stake in a joint venture with First Financial Holding.
Aviva will sell its 49 percent stake in First-Aviva Life Insurance for a token consideration of USD$1, the company said.
Following the disposal, Aviva will not inject any funds into the joint venture in future rights issue projects and will completely withdraw from the Taiwan market, First Financial said.
The decision was made based on the UK firm's global development strategies, according to First Financial. Aviva has been reducing its presence in the Asian market in recent years by withdrawing from South Korea, Malaysia and Sri Lanka, while in Europe, it has pulled out of Ireland and Russia, First Financial said.
Established in 2008, First-Aviva Life Insurance was to become the first joint life insurance company in Taiwan. It currently has about 60,000 customers, with 90 percent of them being clients of First Commercial Bank, the flagship entity of the group.
First Financial said that despite the shareholding change in First-Aviva Life Insurance, the interests of all of its customers will be fully protected and its long-term commitment to the life insurance unit remains strong.
According to statistics compiled by the Financial Supervisory Commission's Insurance Bureau, First-Aviva Life Insurance posted a loss of NT$57.72mn (US$1.91mn) in the first half of 2017, and total premium revenue stood at NT$5.6bn. The insurer had a risk-based capital ratio of 260 percent as of the end of June, higher than the minimal requirement of 200 percent, the data showed.
In a statement, Aviva said that following a strategic review of Aviva Taiwan, Aviva concluded that the business is not central to the group’s strategy to focus on markets where it can achieve scale and profitability or have a distinct competitive advantage.
The transaction which is expected to finalise in 2018 has a negligible impact on Aviva’s IFRS net assets, Solvency II capital position and IFRS operating profit. The transaction is subject to customary closing conditions including regulatory approval.
Executive Chairman of Aviva Asia and Global Chairman of Aviva Digital, Chris Wei said: “We have refocused Aviva’s Asian business on core markets where we have excellent opportunities to grow. With our strong partners and our digital focus, we are intent on disrupting the traditional insurance market.”
HSBC Life appoints Lui as CEO
HSBC Life has named Danny Lui as CEO, effective immediately.
In his role, based in Shanghai, Lui is responsible for driving the growth of HSBC's insurance business in mainland China.
The appointment has been approved by the China Insurance Regulatory Committee.
Lui brings with him 20 years’ experience within the financial services industry where he has mainly assumed financial management roles. Since 2013 he served as CFO of HSBC Life and additionally took up the role of interim CEO from January 2017.
Zurich hires Bendl as President Director & Country Manager
Zurich has hired Chris Bendl as president director for Zurich Topas Life and country manager for Zurich Indonesia.
Bendl joins from AIG where he spent 23 years in its international life operations in the Middle East and Southeast Asia and also Manulife.
He has served in leadership positions in the investment, pension and insurance subsidiaries spanning Canada, Indonesia, Hong Kong and the Philippines.
In his new role, Bendl will report to Jack Howell, CEO, Asia Pacific.
Chubb appoints Rayfield as head of casualty in Singapore
Chubb has appointed Edward Rayfield as head of casualty in Singapore.
Rayfield brings with him strong casualty underwriting and industry experience. He most recently served as casualty manager, global broker unit NSW & ACT for Chubb in Australia, where he was responsible for overseeing the performance and growth of the business portfolio.
Prior to moving to Australia, Rayfield spent a large part of his career as a casualty underwriter in Chubbs operations in Europe. This provided him with deep underwriting expertise for both local and international risks.
In his new role, Rayfield will report to Liam Burrell, division head of property & casualty (P&C).
His responsibilities will include the day-to-day management of the casualty and work injury compensation portfolios in Singapore, including all underwriting and market-facing functions.
In addition, he will lead product development as well as underwriting initiatives to achieve sustainable growth.
China's major courier firms to set up insurance joint venture
Four of China's major courier companies are planning to set up an insurance company for the country's logistics industry with two state-owned enterprises.
The insurance company will be the first of its kind in China, according to a report on China.org.cn.
In a statement one of China's largest delivery companies, STO Express said it would establish the insurer together with three other courier companies as well as Jiangxi Financial Holding Group and Shandong Jingjin Holding Group. Another private company, Guangzhou Baogong International Freight Agency, will also raise money for the joint venture.
The proposed insurer, temporarily named Zhongbang Logistics Insurance, will have a registered capital of CNY1bn (US$152mn), according to the notice.
The news has been confirmed by YTO Express, ZTO Express and Yunda Express.
The logistics sector, especially the express delivery industry, has seen fast development in China over recent years. However, many of the risks in the field are not covered by traditional insurance products.
Hence, Zhongbang Insurance plans to release a series of insurance products covering the basic risks in the logistics industry, including those for transportation, vehicles, property, liability and accidents.
The proposed insurance company will need to secure the approval of the CIRC for its operating licence.
New infrastructure protection laws to counter security threats in Singapore
Recently in Singapore’s Parliament, a proposed infrastructure protection Bill was passed, paving the way for new laws, which will require some new buildings to absorb security measures into their designs.
The measures are part of Singapore's Ministry of Home Affairs (MHA) counter-terrorism strategy, and come at a time when the city-state is facing its "highest" terror threat in recent years, as described by MHA's terrorism threat assessment report issued in June 2017.
Under the new law, buildings which house essential services, are iconic, or with high human traffic will have to ensure that there are adequate building security measures in place, given that they could be targeted by terrorists, with the intent of disrupting such services or inflicting mass casualties. Examples of buildings which the laws would likely apply to are the city-state’s Changi Airport and Sports Hub.
“Such measures, which include video surveillance, security personnel, vehicle barriers, and strengthening the building against blast effects, will help deter and deny attackers, as well as minimise casualties and damage in an attack. Where possible, security measures should be incorporated at the building design stage as it is the more cost-efficient and effective way to secure a building,” said MHA in a media release last month, when Second Minister for Home Affairs Ms Josephine Teo first tabled the Bill for its First Reading.
To achieve its objectives, the Bill has two prongs of provisions; enhancing building security in Singapore and enhancing security powers to protect sensitive installations.
The Bill will allow MHA to designate selected new buildings as 'Special Developments', and selected existing buildings as 'Special Infrastructures'.
These buildings will need to address security risks as part of the building's design prior to being built or when they are about to be renovated. Before construction or renovations can begin, MHA's approval of the security plans for the buildings will need to be obtained. This requirement may apply to critical infrastructure providing essential services, and iconic or large commercial developments.
MHA will also be allowed to direct owners of selected buildings to put in place security measures, for example vehicle barriers or video surveillance, to guard against terrorist attacks, and can issue emergency orders to protect the building if a terrorist attack is assessed to be imminent.
The Bill will intensify the security of existing protected areas and places in Singapore for example military camps and immigration checkpoints by giving security personnel of these sensitive installations powers to deal with threats in the surrounding area. This includes powers to question suspicious persons and inspect their belongings or to require them to leave the area.
The Bill will also make unauthorised photography and videography of these protected locations an offence, to prevent surveillance by terrorists. Security personnel will be able to stop persons from taking photographs and videos, and take follow-up actions, such as examining and requiring deletion of the photos and videos.
In response to questions in parliament on the cost implications of its requirements, Ms Teo said that measures could cost 0.2 to 3 percent of total construction cost. For those who disregard the new laws, large fines can be expected. Owners or occupiers of developments who must submit a security plan to the authorities for approval before carrying out major construction works could be fined up to S$200,000 and be jailed up to two years for failing to do so.
The laws will entail other changes in due course: A Commissioner of Infrastructure Protection (a senior public servant from the MHA) will oversee the administration of the new laws.
In the meantime, there will be more training for security and auxiliary police officers, and engineers specialising in protective security, for which a new scheme will be launched in 2018.