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EC News Asia Edition (10th January 2018)

  • Publish Date: Posted over 6 years ago
  • Author:by Alan Jarque

Round-up of the latest news and developments from the Asian insurance market with stories from Cunningham Lindsey, AXIS Insurance, XL Catlin and more.

Cunningham Lindsey promotes Seng to CEO in Singapore

Cunningham Lindsey has announced the promotion of David Seng to CEO of its Singapore operation, replacing Robert Williams, effective immediately.

In his new role, Seng will be responsible for leading the Singapore team to strengthen the client and partner relationships via the improvement of the high levels of client service delivery, protecting clients’ brands and by carefully managing claim costs.

Seng joined Cunningham Lindsey in 2004, and is a Chartered Loss Adjuster, Chartered Insurance Professional, an Associate of the Singapore Insurance Institute, a Senior Associate of the Australian and New Zealand Institute of Insurance and Finance, and also a member of the Australian Institute of Chartered Loss Adjusters.

Seng’s appointment sees Robert Williams, former Cunningham Lindsey Singapore CEO, transition to a major and complex loss regional role. Williams will be responsible for executing on significant losses, as well as working with insurers and reinsurers to maintain improvement of the company’s high standards of technical quality across the region.

Commenting on the appointment of Seng, Cunningham Lindsey’s Chief Executive Officer (CEO) of Asia Pacific, Damon Bennett, said; “David’s wealth of experience in handling major losses and deep-seated knowledge of the region will significantly enhance the capability of the Singapore team and further strengthen our positioning and services across the region.

“Being able to attract a person of David’s calibre underlines our commitment to continually improve service delivery to clients across the region. I am confident that, under his leadership, the team in Singapore will continue to contribute to the success of Cunningham Lindsey in APAC.”

AXIS Insurance promotes Lim to manage insurance business in Singapore

AXIS Insurance has promoted Nicole Lim to deputy chief underwriting officer, Singapore.

Along with managing the office’s day-to-day operations, Lim will oversee AXIS’ insurance business in Singapore.

She will continue to report to Rory MacGregor, the former executive vice president and Singapore underwriting manager for AXIS Insurance, who was promoted to head of regional hubs and international distribution in October 2017.

Lim was previously vice president, underwriting, for AXIS’ Singapore office. She joined AXIS in 2013, and has previously held a variety of underwriting roles within Allianz, Liberty and Aon Risk Services.

Commenting on the promotion, Macgregor said: “Nicole has built a strong reputation within the Singapore market and is a seasoned underwriter with deep expertise across all energy specialty classes,”

“She has helped foster collaboration between our Singapore team and with our other offices, further enhancing the service that we provide to our clients. At AXIS, we place a priority on creating an environment where great talent can thrive, and we are pleased to see Nicole promoted to manage our insurance business in Singapore.”

XL Catlin appoints Wilhelm as regional product leader

XL Catlin has hired Todd Wilhelm as regional product leader for growing its energy, property and construction book in Asia Pacific.

Willhelm will be based in Singapore and brings over 25 years’ experience in the insurance industry, specialising in property and construction.

Prior to joining XL Catlin he most recently held the position of chief underwriting operations officer and head of property & engineering, emerging markets at QBE Insurance. Before this, he worked at ACE Insurance and FM Global.

Commenting on the appointment, head of international property underwriting for XL Catlin’s Insurance business, Ian France said: "With his considerable underwriting experience across multi-lines in Asia Pacific, Todd is ideally positioned to look at opportunities and solutions that will make a difference to our clients in the region."

Craig Langham, chief executive, Asia Pacific- Insurance, added: "Growth in Asia is still expected to outpace the anticipated growth in other regions. In particular, China’s USD$4trn 'Belt and Road Initiative' economic initiative will bring about tremendous opportunities across Eurasia. Projects such as construction, utilities and infrastructure are growing in size and complexity, with risks that are very much interconnected. When taking on these projects, companies are increasingly looking to work with insurance partners to address and manage their risks.

"It’s therefore crucial to have the right expertise in place to tailor solutions for these clients. Todd’s appointment reflects our continued commitment to investing in the best talent to support companies in Asia Pacific."

Zurich sells Singapore Life business to newest life insurer

Zurich has entered into an agreement with Singapore’s newest life insurance company to acquire its Zurich Life Singapore business portfolio. 

Under the agreement, Singapore Life will become responsible for all Zurich Life Singapore’s customers’ policies, totalling approximately SGD$6bn (USD$4.5bn) of coverage for life, critical illness and disability benefits.

The announcement follows Zurich Life Singapore’s closure to new business in December 2015 and does not affect any of Zurich’s other life or commercial insurance businesses in Singapore, including Zurich International Life (Singapore branch) and Zurich Insurance Company (Singapore branch), the company said. 

The transfer of all Zurich Life Singapore’s policies to Singapore Life is expected to be completed in the first half of this year, subject to confirmation by the High Court.

CEO of Zurich Life Singapore, David Kneale said: “This decision is in line with Zurich’s strategy to optimise its portfolio and geographical footprint, and follows an extensive process to ensure that existing policyholder terms and conditions are safeguarded. We are confident our customers will continue to enjoy a high level of service and security with Singapore Life. We remain fully committed to growing our commercial insurance business in Singapore and maintaining excellent customer service for our international life customers who are not impacted by the transfer.”

CEO of Singapore Life, Walter de Oude added: “Singapore Life is thrilled to offer a new home to Zurich Life Singapore’s customers, and to continue enhancing their experience of owning insurance for many years to come. Singapore Life is built on the belief that technology will create a better kind of insurance company. Everybody needs life insurance and Singapore Life, being a digital insurer, makes it a better and easier experience.

“Bringing this portfolio of customers into that of Singapore Life’s is exactly in line with our strategy to accelerate quickly in becoming a preferred Singaporean insurance company for our customers’ needs. With the strong support from our shareholders, we are confident that this agreement will demonstrate Singapore Life's aspirations for significant growth and positively contribute to Singapore’s insurance industry and beyond. We will continue to look for further acquisitions over time.”

Sompo Japan enters home sharing sector

Sompo Japan and online hospitality service Airbnb are joining together to provide services meant to reduce problems with home sharing in Japan, the first collaboration with a Japanese insurer for the US-based tech company.

The two companies will jointly develop insurance products. Airbnb currently offers universal compensation insurance to all hosts, however Sompo Japan hopes to use the platform's knowledge to develop more specialised policies.

As part of the partnership, Sompo Holdings unit Prime Assistance will operate a 24-hour call centre for Airbnb hosts and guests to respond to complaints regarding issues with their rooms, noise and garbage. Service personnel will be dispatched if necessary to prevent any situations from worsening, reported The Nikkei.

This service is already being tested in some areas before it is scaled up. The call centre will also provide directions to properties for guests.

Home sharing is expected to grow in Japan after legislation freeing this business from Japan's hotel law restrictions takes effect in June. Motivated by public concerns, local governments are adding their own regulations on top of the national home-sharing law, which imposes a cap of 180 days a year on such home rentals.

Nearly half of Tokyo's 23 wards have proposed home-sharing regulations. The northern island of Hokkaido and the old capital of Kyoto plan to establish their own rules as well.

Despite their misgivings, local authorities and groups are looking to work with Airbnb to relieve shortages of lodgings, make use of empty homes and support renovation of traditional Japanese houses. Sompo Japan has also concluded agreements with 84 local authorities for such regional revitalisation projects.

Vietnamese insurance industry set to soar in 2018

Last year, the Vietnamese insurance market maintained a high growth rate of 21.2 percent, with total revenue of VND105.61trn (USD$4.65bn), a senior Finance Ministry official has said.

This year, the aim of the insurance sector is to achieve total revenue of VND129.24trn, an increase of 22.38 percent from 2017. The insurance industry is also expected to benefit from the country’s projected economic growth of more than 6 percent annually over the next three years.

The figures were released at a recent meeting hosted by the Ministry of Finance’s Insurance Supervisory Authority (ISA) to review the sector’s 2017 performance and to set business targets for the year ahead.

Of the 2017 total revenue, non-life insurance premiums stood at VND40.56trn, representing an increase of 10.61 percent, and life insurance premiums totalled VND65.05trn, rising by 28.9 percent, said Mr Pham Thu Phuong, Deputy Director of the Ministry of Finance’s ISA.

In addition, total assets of insurance companies are estimated to have increased by 23.44 percent to VND302.94trn, reported Vietnam News Agency citing Mr Phuong. The companies re-invested VND247.8trn in the economy, which is an increase of 26.74 percent from 2016.

The insurers also paid VND29.42trn to customers in 2017, or 14.92 percent higher than in 2016.

To ensure the 2018 targets are reached, the insurance sector plans to re-invest VND305.49trn into the economy. Insurers are also targeting an increase in their total assets to VND370.81trn by the end of the year. The insurance industry will focus on building and streamlining policies and restructuring insurance firms, besides developing new products and improving the quality of services.

However, further growth of this sector means many challenges will remain.

Director of ISA Phung Ngoc Khanh explained that awareness among Vietnamese people about life insurance may have increased, but most still do not believe that it is worth the expense. In fact, almost all Vietnamese people are wary of it and think it unnecessary to buy insurance because they do not have a thorough understanding of its importance.

Life insurance products usually involve a long-term contract, so many customers are also concerned about their financial capacity to upkeep the policy into the future, Mr Khanh said. Doubts about the commitment of foreign life insurers to permanently operate in Vietnam also contribute to the low penetration rate, which stands at less than 1 percent.

However, besides traditional sales methods, life inSurers have started partnering with commercial banks to increase sales and promote products.

Although the bancassurance market in Vietnam has remained slow, contributing only 2 percent to the total turnover of the insurance market, analysts believe that this channel has great potential, and now some 35 commercial banks and financial institutions are collaborating with insurers.

According to experts, the target of more than 20 percent growth in the insurance sector in 2018 is achievable as the operational scale and the distribution channels of insurers have been expanding, particularly amid an anticipated bancassurance boom.

Committee set up by IRDAI recommends outcome based insurance regulations

A committee set up by the IRDAI has suggested that the regulator consider moving to outcome based regulations that encourage behaviour in the direction of desired outcomes while leaving operational details to the discretion of insurers, for example input parameters.

The panel says the IRDAI should put forth a roadmap for the industry to move towards outcome based regulations. The recommendations were set out in a report released recently based on findings following a review by the committee of the existing framework for insurance products. 

The committee says that the stage is now set for the industry to counter new challenges such as; evolving customer needs, changing demographics, emerging distribution landscape and the need for continuous innovation.

The report stated that “to address these, it is imperative that the industry adapt and the regulatory landscape evolve to support these innovations without compromising the degree of protection offered to customers.”

In the context of product regulations, the committee outlines some advantages of moving to outcome based regulations that include; the reduction of the overall infrastructure cost of multiple restructuring and aligning the product design for compliance, it allows insurers to quickly adapt to the changing ecosystem and market factor, foster self-regulation by enabling higher internal governance by the insurers themselves and it will also increase the scope for innovation that deliver meaningful value to customers.

The Authority has already taken some steps in moving towards outcome based regulations which is reflected to some extent in product regulations issued in 2013.

Some of the areas in the regulations that indicate an output based governance are the RIY (Reduction in Yield) for unit linked that ensures minimum level of benefit at various stages and the setup of internal With Profits Committee to oversee certain aspects of With Profits products.

From regulatory perspective, additional safeguards of reporting and adequate disclosures can be mandated instead of input parameters, says the report. The mandate for compliance should be made stringent and any non-compliance dealt with severely.

Taiwanese Cabinet to encourage insurers' investments in infrastructure

The Taiwanese Cabinet has announced plans to encourage insurance companies to invest in public infrastructure projects and the long-term care sector in order to increase private investment in government-led projects.

At a news conference introducing new measures to attract private investment, Cheng Cheng-mount, financial supervisory commission vice said: “The Ministry of Finance is to standardise investment contracts, as insurance companies are unfamiliar with public infrastructure programmes. Matching insurance companies with third-party businesses can also help insurance companies invest in public infrastructure projects.”

The Finance Ministry said measures would be taken to securitise public infrastructure projects, allowing the insurance sector to participate in infrastructure construction with a new financial tool.

The insurance sector could invest as much as 10 percent of its disposable funds, approximately NT$22trn (USD$733.6bn), on public infrastructure projects but only 1 percent of that has been invested so far, suggesting a large untapped investment capacity, reported The Taipei Times.

Additionally, insurers have been requesting government approval to invest in the long-term care industry to facilitate the sale of related policies, deputy minister of finance Chuang Tsui-yun said, adding that the approval would be granted following the passage of a draft act regulating long-term care institutions.

The Cabinet would recognise long-term care institutions as social welfare facilities in 2018, which would allow operators to enjoy tax benefits, thereby encouraging investment in the long-term care sector, she added.

MAS warns against cryptocurrencies investments

The Monetary Authority of Singapore (MAS) has advised the public to act with "extreme caution" and understand the significant risks they take on if they decide to invest in cryptocurrencies.

The regulator expressed in a statement recently that it is concerned members of the public may be attracted to invest in cryptocurrencies like Bitcoin, due to the recent escalation in their prices.

It reminded the public that cryptocurrencies are not legal tender and are neither issued by any government nor backed by any asset or issuer.

MAS said it considers the recent surge in the prices of cryptocurrencies to be driven by speculation, with a high risk of a sharp reduction in prices. It warned: "Investors in cryptocurrencies should be aware that they run the risk of losing all their capital.”

Currently, there is no regulatory safeguard for investments in cryptocurrencies in Singapore. MAS highlighted that it does not regulate them, similar to regulators in most jurisdictions and its regulations do not extend to the safety and soundness of cryptocurrency intermediaries or the proper processing of cryptocurrency transactions. 

As most operators of platforms on which cryptocurrencies are traded do not have a presence in Singapore, it would be difficult to verify their authenticity or credibility. When investors deal with entities whose backgrounds and operations cannot be easily verified, this poses greater risk of fraud.

Cryptocurrency transactions are generally anonymous, making them vulnerable to being misused for unlawful activities. If an intermediary is found to have used cryptocurrencies illegally, it could result in its operations being shut down by law enforcement agencies. There is also a risk of loss should the intermediary be hacked, as it may not have sufficiently robust security features. 

"Members of the public who lose money from investing in cryptocurrencies will not be able to rely on any protection afforded under legislation administered by MAS," warned the regulator.

"Investors should carefully assess whether an investment in cryptocurrencies is suitable for their investment objectives and risk appetite."