While the prospects of Asia’s insurance industry look promising, with the South and East Asian region’s life insurance premiums rising by 18% to US$238 billion last year, insurers should be alert to potential risks looming over the horizon, said Lim Hng Kiang, Minister for Trade & Industry and Deputy Chairman of the Monetary Authority of Singapore, at the 25th Pacific Insurance Conference in Singapore yesterday.
Asia, said Lim, will not be insulated from economic developments in the G3 economies, where the Euro sovereign debt crisis remains unresolved and expectations of growth in the US economy have significantly been scaled back. “If another world recession were to take hold, our region will see its trade and investment flows curtailed and economic growth sharply reduced.”
Insurers, he said, should have contingent plans to prepare for and manage a potential downturn. To boost its responsiveness to the population’s needs, he urged the industry to enhance the penetration and availability of insurance, raise financial literacy and consumer education levels, and improve insurance distribution and safeguard retail customers’ interests.
Speaking at a panel discussion on bancassurance, David Fried, Group General Manager & Group Head of Insurance, HSBC Holdings plc, said that regulation poses the biggest threat to the industry. With the implementation of Basel III and Solvency II looming, he expects the industry will run into a number of headwinds for bancassurance going forward.
Gavin Pearce, Acting MD, Wealth Division of ANZ Australia, advised bancassurance players to get ahead of the regulatory curve, or else “the regulators will come down a lot harder” on them.
The 25th Pacific Insurance Conference has attracted more than 300 delegates and runs until 14 September.