Opportunity knocks – insurer profile

The International Insurance Society (IIS) is holding its annual global insurance forum in Singapore this year. It is a reflection on the changes taking place in the Asian insurance market, says Michael Morrissey, president and chief executive of the IIS. “Asia has seen the fastest premium growth of any region in the world in recent years. It is a combination of the economic growth in the region and the slowdown that we’ve seen everywhere else.” Asia has held an unenviable reputation in the insurance market for comparatively low rates of coverage, even in the more mature markets such as Japan, Korea and Taiwan. Motor insurance is enjoying particular growth, while property, casualty and liability lines are also enjoying steady appreciation. The growth is still more prominent in consumer-facing lines, as opposed to the commercial and corporate insurance market, but this could well change, says Mr Morrissey. “I see the commercial insurance market in Asia accelerating. Events like the Thai floods and the Tianjin explosion have helped raise the consciousness of risk managers and insurance buyers and led them to consider the purchase of more insurance coverage.”hideThere has also been considerable growth in the Asian reinsurance market, says Mr Morrissey – both for the international powerhouses like Hannover Re, Swiss Re and Munich Re, but also the domestic players like China Re and Korea Re. “The rest of the world has traditionally bought more reinsurance than in Asia but this is changing, especially in China and the ASEAN.” A lot of this is down to a change in culture and mindset, says Mr Morrissey. The rise in natural catastrophe and man-made losses have led insurers and large companies to consider reinsurance, something that has been encouraged by insurance regulators such as the China Insurance Regulatory Commission. A key theme of the IIS Global Forum is the threat of disruption to the traditional insurance market from tech-savvy newcomers, akin to the impact of Uber on the taxi industry. The event’s tagline is ‘innovation and industry transformation’ and features panel discussions with so-called ‘disruptive innovators’. “I see it as both a threat and an opportunity,” says Mr Morrissey of the digital disruptors. “In the insurance world, it used to be the large eating the small and now it is the fast eating the slow. A lot of the smaller companies are showing a lot more innovation in areas like risk mapping, predictive modelling, parametrics, online distribution and customer service. And they are starting to gain market share.” In a region like Asia where the insurance industry is growing at a rapid rate, at least in relation to other established markets, there is a great opportunity for companies to capitalise on new technology and the business possibilities it brings, says Mr Morrissey. Technology will have a key influence on the growth and evolution of Asia’s insurance market and may even see it become more advanced in certain areas than the more established markets of Europe and the US. “Technology enables companies to skip steps, particularly when you are starting with a blank piece of paper. It can be very difficult to change legacy systems. “There are these big European companies with glorious histories and grand headquarters but they are in danger of being overtaken by smaller, nimbler companies. And in Asia there is not the same big legacy infrastructure. We have seen a lot of international insurers do well in Asia as a result and we have also seen a lot of Asian insurers able to expand globally.” Of course, it would be wrong to think of Asia as a single homogenous insurance market, as Mr Morrissey notes. However, he points out: “Every region has its own characteristics but there are similarities, particularly in the growth and evolution of the risk managers and insurance buyers. It is a role that is maturing from just placing orders with brokers to becoming genuine risk managers looking at their exposures on an enterprise-wide scale and looking more strategically at the use of insurance.” Such an evolution involves continuous education and awareness, as well as greater involvement from global companies and also associations such as the Pan-Asia Risk and Insurance Management Association (Parima), says Mr Morrissey. “Parima is providing a great service in terms of raising the bar for risk management standards and informing its members of the latest developments in the industry. We have seen similar progress in other regions like the Middle East and Latin America. It is a learning curve and involves looking at what has been done elsewhere.” This is not to say that risk managers in Asia simply have to copy what has been done elsewhere and wait to catch up with their counterparts in US and Europe. Given the advancement and availability of technology – not least in terms of big data and analytics – there is an opportunity for risk managers in the region to forge new ground, says Mr Morrissey. The take-up of best practice and new research is often more eagerly embraced in growth markets, like Asia. They are not encumbered by an entrenched relationship between insurers, brokers and risk managers that has built up over decades. “I think it is very positive. It is good for the corporations because it puts more pressure on the insurers. Sophisticated consumers are more demanding.” Many of the big companies in Asia that have been buying insurance for years and have relatively big departments may be slower to change, but the large number of rapidly growing businesses in Indonesia, Malaysia and Vietnam are starting with a blank sheet of paper and are free to pick from a full menu of risk management options and are not held back by years of bureaucracy and tradition. The role of the risk and insurance managers is one that has become of much greater interest to the IIS. The upcoming Global Insurance Forum will for the first time include a panel discussion from the buyers’ perspective, featuring a number of risk managers at Asian companies such as Singapore’s Changi Airports International, Indian conglomerate Reliance Industries and Thailand-based investment group Charoen Pokphand. “We have not focused on the insurance buyers for a long time at the IIS,” admits Mr Morrissey. “So a session like this is long overdue. One of the things that characterises the IIS is the multi-stakeholder approach we take – not just insurers, reinsurers and brokers but also consultants, academics, asset managers, associations and regulators. So why shouldn’t the buyers be included? “I expect the buyers on the panel to tell the insurers what they are unhappy about, where they feel there is a lack of coverage, their views on the disruptors and the alternatives to insurance. It should be a sobering and enlightening experience for the insurers in the audience. We have encouraged the Parima members to really open up and be candid about their experiences, because we want an independent exchange of ideas.” All in all, it is a good time to be a risk manager in Asia, says Mr Morrissey. “In previous times, risk managers were very dependent on their brokers and would buy what was offered to them – but now they are in the driving seat and able to dictate terms and conditions.”

Opportunity knocks – insurer profile

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