Nat Cat makes home insurance

ASIA’S INSURANCE INDUSTRY HAS THE WEAKEST GROWTH

With underperforming countries in major markets such as China, Asia has the weakest growth in the insurance industry amongst the major regions of the world, global insurer Allianz revealed in a report.

In the Global Insurance Report 2022, the report revealed growth in Asia was significantly weaker than the global average. In the life insurance market for example, it only clocked a +0.9% growth rate well below the global average of +4.4%. Asia’s non-life segment meanwhile grew by +1.7% far from the +6.3% global average.

The common factor in the below average performance of Asia was mainly due to underperformance of China. In the life segment, China holds nearly 13% of the global premium volumes written. According to Allianz the market shrank by -1.7% in 2021.

“The premium decline is mainly due to stricter regulation, i.e. the data of failed insurance companies no longer being included in the statistics. Underlying growth seemed to be closer to +4%, which – admittedly – is also rather weak for the Chinese market,” Allianz said.

Performance issues

This is the same case for the non-life segment which saw the market shrinking by -1.7% in the last year.

Besides China, negative growth rates in the life insurance industry in Hong Kong, South Korea and Taiwan also put a huge drag on the region’s growth. In the non-life segment, Japan’s premium volume almost stagnated at +0.2% growth rate, pushing down the regional average growth.

Increase in home insurance premiums will lead to underinsurance or no insurance

Nat Cat makes home insurance unaffordable

AUSTRALIA

Frequent natural catastrophes are making home insurance unaffordable in Australia and this could lead to a serious underinsurance gap or worse: homeowners opting not to buy insurance at all.

This is because extreme weather events are forcing home insurance premiums to surge. In fact, according to data and analytics firm GlobalData, home insurance premiums in Australia grew by 5.9% in 2021, the highest in the last seven years.

According to GlobalData’s senior insurance analyst Swarup Kumar Sahoo, the impact of natural catastrophe events is most severe on personal property insurance which accounted for 80% of claims that occurred in 2021.

“This will have a significant impact on home insurance premiums as insurers will pass this to the consumers to recover the losses. Rising insurance costs and increased frequency of natural disasters will leave around 4% of Australian homes uninsurable by 2030,” Sahoo said.

According to Sahoo, home insurance prices in Australia registered significant growth after every natural disaster.

1 in 25 homes in Australia are in danger of being uninsurable by 2030

Northern Australia, which is prone to natural disasters, registered growth in both claims and premiums during the last five years. Natural disasters that occurred in 2019 increased average premiums on home insurance by 20% in this region compared to 11% in the rest of Australia.

Recent floods in February and March 2022 which caused an insured loss of US$3.35bn, is expected to further increase home insurance prices in 2022.

“Increase in home insurance premiums will lead to underinsurance or no insurance as lower and middleincome groups will look to reduce policy coverage if they are unable to afford high premiums,” Sahoo said.

This analysis was similarly echoed by the Climate Council of Australia.

According to the council, about one in 25 homes or 520,944 properties in Australia are in danger of being uninsurable by 2030, due to rising risks of extreme weather and climate change.

This number increases to one in seven homes within Australia’s top 10 electorates most at-risk of environmental and climate impacts.

According to the report of the Climate Council, across all electorates in Australia, 3.6% of properties (520,944) or one in every 25 properties will be uninsurable by 2030. In addition, one in 10 (9%) of properties will reach the ‘medium risk’ classification by 2030, with annual average damage costs equaling 0.2% or more of the property replacement cost.

The report also found out that riverine flooding poses the biggest risk to properties. Of the properties classified as ‘high risk’ by 2030, the majority (80%) of that risk is due to riverine flooding.

Australia Home Insurance - Average Premium Per Policy (AUD), 2017-2026

Singaporeans are proactive in planning for their retirement

The age-old issue of ageing

HSBC Life Singapore has launched the HSBC Life Variable Annuity.

The past two years has been a turning point for society. The pandemic has not only made us more aware of the necessity of protecting ourselves and our future, but it has also made us all re-evaluate the manner in which we want to live.

The fact is, as technology progresses and more medical advances are made, global life expectancies are also raising. It has now topped 70 years for men1 and 75 years for women2 .

And more than any other region in the world, Asia is experiencing this. In 2019, there were 260 million people over the age of 65 living in the eastern and south-eastern area of the continent alone3. And according to United Nations projections, that number is set to double by 2050. Closer to home, Singapore is set to experience a 21%4 increase in its share of older people by 2050 – one of the biggest rises worldwide.

However, many people are now shifting their emphasis from how long they live, to the way they want to live. Being given the opportunity to age is a good thing, and there are many advantages to it. Longer lives means that many people have the opportunity to spend more time enjoying their retirement, picking up news skills and playing an active role in their community.

However, ageing populations also raise some concerns, both for the individual and society as a whole. Will you be able to continue to fund your lifestyle and standard of living after you have stopped working? Do you have enough set aside for your medical needs? Who can step in should you need help looking after yourself? Can the healthcare system support an influx of patients coming in with age-related issues?

These are all difficult questions that many find hard to face. And there are no easy solutions or answers. But very often, individuals will need to take steps to prepare for their future. However, that doesn’t mean that they have to go at it alone. Being part of a society, there are many organisations in place that can play a part, such as governments, employers and financial institutions.

The insurance sector has a pivotal role to play as well. Taking into account the increasing longevity of society, insurers are developing new products to help people access support that they may be more likely to need later in life.

And we are already seeing signs that many Singaporeans taking advantage of these products and future-proofing their lives. According to the Life Insurance Association (LIA) industry report in 20205 , Singaporeans are being proactive in planning for their retirement. The industry recorded a significant increase in the uptake of retirement policies.

The fact is, to be able to enjoy your retirement without having to stress about finances, you will need to have a steady income even after you stop working. To help with that, HSBC Life Singapore has launched the HSBC Life Variable Annuity, a retirement plan which combines the assurance of a steady guaranteed base level of income and the ability to generate significant upside income potential.

What makes this solution so unique is that it ensures Singaporeans remain invested and protected from any sudden market fluctuations while allowing them to take advantage of any potential upside. HSBC Life Singapore is the only insurer to offer this unique product currently.

This capital guaranteed single premium retirement solution allows you to fully participate in the market upside by locking in higher guarantees along the way. Its ratchet feature increases the policyholder’s guarantee on a monthly basis whenever the account value is higher than the existing guarantee.

HSBC Life Variable Annuity also protects against downside risk as the policyholder’s monthly payout will never decrease even when the market falls, and allows the flexibility to access to the account value without surrender charges.

At the end of the day, living to a ripe old age is a blessing, regardless what precautions or actions you have put in place in your youth. But planning ahead to protect your health and wealth will definitely give you greater peace of mind as you look to the future.

1 https://data.worldbank.org/indicator/SP.DYN.LE00.MA.IN 2 https://data.worldbank.org/indicator/SP.DYN.LE00.FE.IN 3 https://www.un.org/en/development/desa/population/publications/pdf/ageing/WorldPopulationAgeing2019-Highlights.pdf 4 https://www.un.org/en/development/desa/population/publications/pdf/ageing/WorldPopulationAgeing2019-Highlights.pdf 5 https://www.lia.org.sg/news-room/industry-performance/2020/life-insurance-industry-achieved-04-per-cent-growth-in-2019-uplifted-by-sustained-trajectory-ofannual-premium-business HSBC Life Variable Annuity is underwritten by HSBC Insurance (Singapore) Pte. Limited (Ref.No.195400150N).

This article contains general information only and does not have regard to the specific investment objectives, financial situation and particular needs of any specific person. This is not a contract of insurance and is not intended as an offer or recommendation to buy the product. A copy of the product summary may be obtained from our authorised product distributors. You should read the product summary before deciding whether to purchase the product. You may wish to seek advice from a financial adviser before making a commitment to purchase the product. In the event that you choose not to seek advice from a financial adviser, you should consider whether the product in question is suitable for you. Please refer to the policy contract for the exact terms and conditions, specific details and exclusions of this product. As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. It’s also detrimental to replace an existing life insurance policy with a new one as the new policy may cost more or have fewer benefits at the same cost.

HSBC Insurance (Singapore) Pte. Limited reserves the right to review and amend the subscription of units and fees including the Asset Management Fee/ Accounting and Valuation Fee by giving you at least 30 days’ advance notice.

Information is correct as at 10 January 2022.

HSBC Life Variable Annuity helps ensure you stay secure through the ups and downs of life.

Learn more at insurance.hsbc.com.sg/va.

HSBC Life Variable Annuity (the "product") is underwritten by HSBC Insurance (Singapore) Pte. Limited (Reg. No. 195400150N). This advertisement contains general information only and does not have regard to the specific investment objectives, financial situation and particular needs of any specific person. This is not a contract of insurance and is not intended as an o er or recommendation to buy the product. A copy of the product summary may be obtained from our authorised product distributors. You should read the product summary before deciding whether to purchase the product. You may wish to seek advice from a financial adviser before making a commitment to purchase the product. In the event that you choose not to seek advice from a financial adviser, you should consider whether the product in question is suitable for you. Please refer to the policy contract for the exact terms and conditions, specific details and exclusions of this product. As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. It’s also detrimental to replace an existing life insurance policy with a new one as the new policy may cost more or have fewer benefits at the same cost. HSBC Insurance (Singapore) Pte. Limited reserves the right to review and amend the subscription of units and fees including the Asset Management Fee/Accounting and Valuation Fee by giving you at least 30 days’ advance notice. This advertisement has not been reviewed by the Monetary Authority of Singapore. Protected up to specified limits by SDIC.