Insurance Asia (October 2024) by Charlton Media Group

Issue No. 22

Display to 31 October 2024

STATUTE SHAKEUP

WHAT INSURERS SHOULD EXPECT FROM ASIA’S NEW REGULATORY TERRAIN

Insurance Asia

Clemens Philippi CEO, MSIG Asia

INTERCONTINENTAL SINGAPORE IS SAVING INSURANCE FOR A RAINY DAY HOW WOMEN IN POWER ARE THE KEY TO BUSINESS SUCCESS INSURANCE UNDERWRITING FALTERS UNDER GLOBAL STAGFLATION TO LEAD AND TO LAG: APAC INSURANCE’S CONFLICTED AI JOURNEY Jim Qin CEO, General Insurance Zurich Insurance (Hong Kong) p. 14

Achmad K. Permana President Director, Allianz Syariah Indonesia p. 10

C2 Insurance Asia

FROM THE EDITOR

sia's insurance sector faces a challenging year, with the top 50 insurers in Singapore experiencing a 3.7% asset decline and the top 50 insurers in Hong Kong seeing a 7.7% premium decline. Our analysis delves into the market's current struggles and the strategies being implemented to navigate these tough times. Find out more on pages 20 and 22.

PUBLISHER & EDITOR-IN-CHIEF Tim Charlton EDITORIAL MANAGER Tessa Distor PRINT PRODUCTION EDITOR Eleennae Ayson LEAD JOURNALIST Olivia Tirona JOURNALIST Aulia Pandamsari GRAPHIC ARTIST Emilia Claudio COMMERICAL TEAM Janine Ballesteros Jenelle Samantila Cristina Mae Posadas

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Another significant issue is that women in the industry continue to encounter obstacles in reaching C-suite positions. Despite some advancements, mid-level barriers remain a significant hurdle, highlighting the need for stronger diversity and inclusion initiatives. Read more on page 4. Global stagflation is also impacting insurance underwriting. The economic slowdown and inflationary pressures demand strategic adjustments from insurers to maintain liquidity and capital stability. Find out on page 16. On page 18, we examine the complex journey of AI adoption in the APAC insurance sector. Whilst AI offers tremendous potential for enhancing efficiency and customer experience, many firms struggle with outdated technology and integration challenges. We're also featuring exclusive interviews with Clemens Philippi, CEO of MSIG Asia, and Jim Qin, CEO of Zurich Insurance, who discuss their strategic visions amidst regulatory changes and market dynamics. Turn to pages 12 and 14, respectively, to learn more. Read on and enjoy!

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Insurance Asia 1

CONTENTS

EVENT NEWS VIETNAM'S INSURERS ARMOUR UP FOR TECH CHALLENGES IN INSURANCE ASIA FORUM - HO CHI MINH

CEO INTERVIEW WHAT INSURERS SHOULD EXPECT FROM ASIA’S NEW REGULATORY TERRAIN

CASE STUDY TO LEAD AND TO LAG: APAC INSURANCE’S CONFLICTED AI JOURNEY

FIRST

INDUSTRY INSIGHT

CASE STUDY

04 Mid-level snags stall women's C-suite climb 06 How SMEs boost growth for embedded insurance 08 IA warns of risks in premium financing amidst rate hikes

16 Insurance underwriting falters under global stagflation 28 Why emerging markets in the region are most vulnerable to insurance risks

24 InterContinental Singapore is saving insurance for a rainy day

CEO INTERVIEW

20 Singapore’s top 50 insurers see 3.7% YoY asset decline 22 Hong Kong’s top 50 insurers experience 7.7% YoY premium contraction

10 Allianz Syariah ramps up Sharia literacy drives 14 Travel insurance sales in Hong Kong soar after unprecedented holiday boom

INSURANCE RANKINGS

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COUNTRY REPORT 26 How Singlife fights low insurance penetration rates

COMMENTARY 32 Digital dilemma: Invest in resilience or risk disruption?

For the online versions of the insurance stories, visit the website

insuranceasia.com

Insurance Asia 3

FIRST MALAYSIAN WOMEN TWICE AS ILLITERATE ON INSURANCE FINANCIAL LITERACY

Women's representation saw modest gains throughout the corporate pipeline, but women of color remain underrepresented. Representation in corporate role, by gender and race, 2023, % of employees (n=276)

early two-thirds of Malaysian women have a poor selfperceived understanding of insurance and takaful products, this is almost two times more than the male population in Malaysia. “It is disheartening to see such low levels of literacy among those surveyed. In today’s ever-changing economy, Malaysians need to bolster their financial resilience by acquiring the necessary knowledge and skills to manage their finances and plan for the future,” said Raymond Lew, chief executive officer of Sun Life Malaysia. Women were reported to be twice as likely as men to face difficulties in recalling key information about their insurance or takaful plans. Additionally, it was found that Malaysian women are doubly reliant on agents for policy comparison and recommendations compared to men. Insurance literacy The Sun Life Malaysia “Insure or Unsure: Sun Life Insurance Literacy Survey” covered 1,107 Malaysians, which revealed that one-third or 32% of Malaysians have no insurance or takaful protection despite 72% acknowledging its importance in providing financial protection against unexpected life events. Ninety-two per cent of those without a policy fall into the monthly income bracket of RM5,000 and below. “High-income earners are more likely to take the initiative to equip themselves with insurance knowledge by conducting their own research through informational articles. This suggests that these individuals prefer a more independent and self-guided learning experience when it comes to understanding insurance concepts and products.” the survey noted. The survey also showed that 22% of respondents have little to no insurance knowledge and 55% are unsure about their understanding and rely on others for assistance. Only 23% expressed confidence in their understanding.

4 Insurance Asia

Note: Figures may not sum to 100%, because of rounding. Total percent of women per level may not sum to overall corporate pipeline totals, because overall figure does not include employees with unreported race data. Source: Women in the Workplace 2023, McKinsey & Company and LeanIn.Org

Mid-level snags stall women's C-suit climb

MANAGEMENT

omen’s representation in C-suite roles grew to over a quarter in the past five years. However, this persists to be a needle in a haystack progress with 90% of women under 30 years old are aspiring to level-up. “One piece of good news that we found in our most recent report is that, if you compare 2023 versus 2018, C-suite women leaders have increased to 28% from 23%. So, that’s 5% within five years. I mean, there’s still room for improvement, but I find it quite telling that people are making that diversity a top agenda item,” Violet Chung, partner at McKinsey & Co., told Insurance Asia magazine. “And I want to caveat, which is important, we’re not just saying that we want more women. What’s important is that it makes a business case,” Chung added. Referring to McKinsey’s Women in the Workplace report, conducted in partnership with LeanIn.Org, the study magnified the importance of diversity, equity and inclusion (DEI) in overall business success. “Most companies have increased or maintained their financial and staffing investments in diversity, equity and inclusion over the

Violet Chung

Yuen Leng Chin

past year. And nearly three in four say DEI is critical to their future success,” the McKinsey report stated. Women are as committed to their careers and promotions as men at every stage of the pipeline, including the director level, where senior leadership roles are within reach. Young women are notably ambitious, with 90% of those under 30 aspiring to be promoted, and 75% aiming for senior leadership positions. The pandemic and increased flexibility have not diminished women's ambitions. Around 80% of women now seek promotions, up from 70% in 2019, and this ambition is mirrored in men. Representation and diversity From the insurer’s perspective, Zurich Malaysia Chief Financial Officer Yuen Leng emphasised the growth potential of businesses if holistic initiatives and programmes were implemented to have greater representation and diversity in the workplace. “At Zurich, we embrace diversity, equity inclusion and belonging (DEIB), and we have a flagship programme, which we call FLAG: Female Leadership Advocacy Group,” Leng shared with the magazine in a separate interview. “The programme brings together C-suite females from across the Asia Pacific region to support us and advise us on the different gender and leadership topics, particularly identifying interventions that can close the gender gap at the more senior levels of the organisation.” Both Chung and Leng stress the importance of awareness and proactive measures to bridge the gender leadership gap. Flexible working arrangements and structured programs like female acceleration initiatives are key strategies. Speaking on the latest innovative approaches, virtual collaboration tools post-COVID offer new opportunities for inclusivity. Online resources and training enhance accessibility, promoting diverse and inclusive workplace cultures. Chung encourages women to embrace ambition and seek support while urging men to actively champion gender diversity. Leng echoes the call for ambition among women and emphasizes mentorship and allyship from men to drive collective progress toward gender equality in the workplace.

Insurance Asia 5

FIRST SG PUSHES FOR NONDISCRIMINATION IN ASSESSMENTS REGULATION

he Monetary Authority of Singapore (MAS) is taking significant steps to promote fair practices in the insurance industry for individuals with disabilities and mental health conditions. In response to a parliamentary question, Deputy Prime Minister and MAS Chairman Lawrence Wong clarified that whilst insurers are discouraged from rejecting applications solely based on these conditions, they are still permitted to assess risks and adjust premiums accordingly. The Singapore government plans to withdraw its reservation on Article 25(e) of the UN Convention on the Rights of Persons with Disabilities, emphasising non-discrimination in health insurance. The guidelines, expected to be finalised next year, aim to ensure objective assessments based on reliable data, enhancing the inclusivity and fairness of the insurance sector. In health insurance, risk assessments consider factors such as medical history, current health condition, and risks arising from known conditions. These assessments must be based on reliable information or data relevant to the risks being insured. No discrimination In December 2022, MAS issued a consultation paper on guidelines for financial institutions, including insurers, on fair practices towards customers, including those with disabilities and mental health conditions. Proposed guidelines emphasise that insurers should not reject applications solely based on declared personal information such as a disability or mental health condition. Objective assessment of every application is expected, relying on reliable information or data relevant to the risks being insured. MAS is in a review period for feedback on the proposed guidelines to be released next year.

6 Insurance Asia

Embedded insurance opens up multiple avenues for customers like SMEs to avail products

How SMEs boost growth for embedded insurance HEALTH INSURANCE

nsurers leveraging on embedded insurance’s capability is not enough to deter the widening global protection gap, with Asia Pacific accounting for nearly half of all uninsured risk. Thus, insurers like Zurich forecast a trend where this costreducing industry will grow: small and medium enterprises (SMEs). Projections by Ernst & Young (EY) suggest significant growth potential, with the embedded insurance channel expected to expand by up to 30% globally across P&C lines. Notably, there’s emerging potential for embedded insurance to extend beyond retail customers to segments like SMEs, presenting new opportunities in the Asia Pacific market. “We’ll potentially start seeing embedded insurance for segments beyond retail customers, such as SMEs. That’s another part of the Asia Pacific (APAC) market that is ready to be explored in the right way in terms of opportunity,” Roopa Malhotra, head of Customer and Digital for APAC at Zurich Insurance, exclusively told Insurance Asia magazine. Contextual strengths Embedded insurance is deemed perfect to fill in the large insurance gaps, especially with the global

Roopa Malhotra

It can create awareness around the need for insurance given it’s placed at the right time at the right point for the customer, making insurance a very logical thing to take up

insurance gap seen to expand to $1.86t by 2025. Ideally, its most adored aspect by the industry is its reduced cost of distribution, which is a common challenge for insurers in the region. “The second strength of embedded insurance is the fact that it’s contextual. This means that it can create awareness around the need for insurance given it’s placed at the right time at the right point for the customer, making insurance a very logical thing to take up rather than something for which the customer needs to be convinced,” Malhotra explained. The contextual nature of embedded insurance not only facilitates awareness but also fosters innovation within the insurance industry. “The reason is that it allows you to leverage multiple avenues through which insurance could be offered, triggering the development of newer products that may include concepts such as usage-based, parametric or micro-insurance. It forces the industry to innovate, and we are happy to look at it from a different lens and foster a culture of innovation within the industry,” she added. The global embedded insurance market is expected to experience significant growth, reaching $296.9b by 2029, with a compound annual growth rate (CAGR) of 24.12% from 2023 to 2029, as estimated by Valuates Reports. Zurich’s long-term goal Looking ahead, Zurich anticipates a surge in embedded insurance adoption, driven by an increasing number of noninsurance partners seeking to integrate insurance into their ecosystems. “I think tech companies and startups can provide solutions that can help established insurers like us to leverage the new, bespoke solutions that are in the field of generative AI in the field of machine learning, cloud computing, etcetera. One of the reasons we have a strong position around this is that we have invested a lot in making our foundation cloudbased.” Malhotra told the magazine. Moving beyond sales, there’s a notable shift towards embedded servicing and claims, empowering customers and providing insurers with more engagement opportunities. A localised approach in both staffing and product development is sorely needed to cater to the unique nuances of each APAC market.

CMY

Insurance Asia 7

FIRST Policyholders should be mindful that purchasing long-term policies using premium financing will magnify such losses due to the leverage effect. Leveraging policy returns and bank loans can magnify potential losses

IA warns of risks in premium financing amidst rate hikes PREMIUM FINANCING

ong Kong’s Insurance Authority (IA) cautioned that premium financing, whilst offering potential benefits, carries inherent risks, particularly in periods of rising interest rates. “In the past era of low-interest rates, through premium financing, policyholders may benefit from the spread between their policy returns and bank loans while also amplifying their returns through leveraging. However, this would in turn magnify the risks and potential losses,” Marty Lui, head of Long Term Business (Acting) of the IA said in an announcement. “The current high-interest rates have

already increased the cost of borrowing, and at the same time possibly decreased the policy returns as the majority of products purchased through premium financing in the market are now participating products, which not only offer non-guaranteed returns that are subject to the investment performance of the insurers but also have a longer break-even period, further aggravating the risks involved in premium financing,” Lui added. New guidelines The IA, in collaboration with the Hong Kong Monetary Authority (HKMA), introduced new supervisory guidelines in 2023

to enhance transparency and affordability assessments in premium financing transactions. These measures aim to safeguard the interests of policyholders amidst evolving market conditions. Information concerns Recent data indicates a significant slowdown in premium financing activities in 2023, reflecting a more cautious approach among stakeholders amidst interest rate hikes. Nonetheless, challenges persist, with complaints regarding inadequate risk disclosure and misrepresentation of information remaining prevalent. To address these concerns, the IA emphasises the importance of informed decision-making both before and after purchasing a premium financing policy. Before acquisition, policyholders are urged to fully comprehend the associated risks and undergo a comprehensive affordability assessment facilitated by insurance intermediaries. Furthermore, ongoing review and prudent financial management post-purchase are essential to mitigate risks and avoid premature policy surrender, which can result in substantial losses for policyholders. “Life policies are often long-term in nature, and early surrender will result in a loss. Policyholders should be mindful that purchasing long-term policies using premium financing will magnify such losses due to the leverage effect," Lui advised in his announcement.

ASIAN LIFE INSURANCE INDUSTRY FACES SLOWDOWN

rojections suggest that by 2030, Asia’s mortality protection gap – the shortfall between the financial protection required by individuals and their actual coverage – is set to widen significantly, reaching a staggering $119t. According to McKinsey's latest Global Insurance Report (GIR), Asia leands in the distribution of insurance through banks, constituting approximately 48% of global bancassurance premiums, with over 50% of premiums coming from this channel in markets like Hong Kong, India, Indonesia, and Taiwan. Slow markets The Asian life insurance industry faced a slowdown from 2017 to 2022, primarily due to the halt in growth in China, HK, and Taiwan during the peak of the COVID-19

8 Insurance Asia

pandemic. In the context of Asia's property and casualty (P&C) insurance sector GIR, global insurers are increasingly turning their attention to the region, despite Asia representing only 20% of the global premium share in the P&C insurance sector in 2022. P&C insurance penetration in Asia has historically remained low, stagnating at around 1 to 2% over the past decade, although it's been growing at about 5% per year, comparable to growth in the Americas and surpassing growth in Europe, the Middle East, and Africa (EMEA). Challenges include a surge in catastrophic claims, rising operational expenses, and newer risks related to cyberattacks and the rapid adoption of electric vehicles. The cyber insurance market is projected to triple in size from 2022 to 2025.

Global life insurance gross written premiums

Source: McKinsey's Global Insurance Report 2023

CMY

Insurance Asia 9

CEO INTERVIEW

Allianz Syariah ramps up Sharia literacy drives

The company organises educational roadshows and offers free sharia insurance in Bogor City.

INDONESIA | Aulia Putri Pandamsari

enewed interest in the halal lifestyle propelled the surge in demand for sharia-based financial services, and with a market that is currently valued at IDR146.12t (US$ 9.3b) and accounting for 5.62% of the market share, insurers in Indonesia are paying closer attention. In line with the vast opportunities available, Allianz Indonesia launched Allianz Syariah as a separate entity in November 2023 in order to offer inclusive products in accordance with local values and customer needs. According to Achmad K. Permana, President Director of Allianz Syariah Indonesia, their company will strive to highlight the concept of mutual assistance in Sharia insurance, a financial system that has already been embedded in Indonesian culture for generations. “With these familiar values, our hope is that we can more easily provide a good and accurate understanding of our products to the Indonesian society, both Muslims and nonMuslims,” Permana told Insurance Asia. Aligning with Sharia principles Permana has called attention to notable differences between Sharia insurance and conventional insurance, citing the former as emphasising inclusive and universal values, making it expected to be acceptable to all segments of society. In conventional insurance, for example, when someone experiences a calamity, they will receive benefits according to the premiums they have paid. But in Sharia insurance, Permana explained that when a customer pays a premium (contribution), it is assured that those contribution payments will be used to help other customers in need of aid through the wakaf (charitable) feature in its shariah life insurance products. “Our commitment is to provide Sharia-based insurance products that meet the protection needs of customers. Although we dynamically adapt to the diverse needs of society, we will always prioritise Sharia principles in every product development," he said. These principles will follow the guidance of Sharia Supervisory Board and regulator, namely the OJK. All innovations undertaken by the company will also be based on the concept of ta’awun (mutual assistance), tawhid (making into one), and the concept of protection among insurance participants, said Permana. “These concepts are also in line with the five core values we adopt in every aspect of our business processes, namely Universal, Trustworthy, Security, Fairness, and Collaborative,” he said. Short-term and long-term steps In maximising the significant opportunities of the Sharia

10 Insurance Asia

Achmad K. Permana, President Director of Allianz Syariah

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Although we dynamically adapt to the diverse needs of society, we will always prioritise Sharia principles in every product development

industry, Allianz Syariah will implement both short-term and long-term strategies. Firstly, it will organise various financial literacy activities to raise public awareness about the importance of having insurance protection for their future plans. According to the 2022 National Survey of Financial Literacy and Inclusion by OJK, the national average literacy and financial inclusion rates for Sharia finance in 2022 were 9.14% and 12.12%, respectively. Allianz Syariah sees this as an opportunity to play a role in financial literacy programmes. One of the activities the company has already undertaken is a roadshow to several cities in Indonesia through the “Insuring 10,000 Indonesian Citizens Movement.” The movement started when Allianz Syariah officially full-fledged, and one of these movements was providing free sharia insurance protection to 1,005 employees of the Bogor City Environmental Agency, West Java. “Our target is to introduce Sharia insurance to people in various regions, communities, and professions, and to give those who do not have insurance the opportunity to directly experience the benefits provided by Sharia insurance,” explained Permana. Furthermore, Allianz Syariah continuously improves the quality of its agents as a solution to the low literacy and inclusion rates in Sharia insurance. This is because the company realises that agents play a crucial role in providing the right understanding to customers regarding the appropriate insurance products. “We often provide comprehensive training to facilitate agents so that they can provide adequate and accurate education to customers,” said Permana.

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Insurance Asia 11

CEO INTERVIEW

Insurers prep for Asia's regulatory shake-up Whilst 2024 is a year of growth, the MSIG CEO tips insurers about Asia's new laws.

SOUTHEAST ASIA

ecent regulatory changes in countries like Vietnam, Thailand, and Indonesia are shaping the future of Asia's insurance industry. Clemens Philippi, CEO of MSIG Asia, said these updates are impacting the market, with new laws affecting technical reserves, foreign ownership, risk management, and capital requirements. He emphasises the potential for industry consolidation and the importance of robust risk management practices, illustrating how MSIG Asia is proactively adapting to maintain its competitive edge amidst these evolving regulations. “In 2024, we will see a continued high demand for insurance solutions, which therefore means continuous (but impacted) growth. [The impact] from new insurance regulations from each market can be positive or negative. This could mean growth opportunities,” Philippi said. In his view, there are three catalysts the industry will see in 2024: higher demand to close the insurance gap, increase in health coverage, and adoption of new technology. Whilst these factors present an opportune time for sprucing up insurance offerings, a hurdle that varies in size for insurers is regulation-related. “On the regulatory side, it can be a positive influence but it can be a small hurdle for growth. If you look at the population-rich countries like Vietnam, Thailand, Indonesia and our region, they’ve all issued new regulations in the recent past,” MSIG’s top man said.

Regulatory updates Philippi gives a rundown of areas that insurers can look into for growth opportunities. Starting with Vietnam, he cites the new bill implemented in 2023. "It talks about technical reserves being strengths, foreign ownership, kept risk management information, disclosure being increased and dispute resolution strictly defined,” Philippi said. Moving on to Thailand, he notes, “You have a new riskbased capital framework introduced, which will also have an impact on the company." Whilst the economy is viewed as “less developed” by Fitch Ratings, its five-year development plan facilitates stability and healthy competition. Indonesia has also introduced new laws regarding various aspects of the insurance industry, including insurance products, distribution channels, reinsurance arrangements, and Sharia-compliant insurance. “Most importantly, in Indonesia, which is a very fragmented market, there’s also an increase in the minimum capital requirements going over the coming years until 2028, up to $1t,” Philippi told Insurance Asia. “And that, of course, is possibly a catalyst for consolidation over the coming years. So I think this is our outlook for 2024. We will closely follow these developments.” 12 Insurance Asia

Clemens Philippi, MSIG Asia CEO

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In 2024, we will see a continued high demand for insurance solutions, which therefore means continuous (but impacted) growth

Long-term outlook The MSIG CEO emphasised the importance of closely monitoring external factors such as economic conditions and reinsurance market trends. He noted that the 2022 renewal season witnessed a significant increase in reinsurance prices, driven in part by unforeseen events like a major hurricane in the Florida region, which impacted both American and Asian markets. Despite these challenges, Philippi expressed confidence in MSIG Asia’s preparedness, attributing their resilience to meticulous risk management practices. The company’s actuarial and claims teams closely track claim developments and inflationary pressures, ensuring that reinsurance partners are kept informed and rates are adjusted accordingly to maintain sustainability. He is particularly proud of MSIG Asia’s proactive engagement with clients — from SMEs to corporate entities — to address potential risks associated with supply chain disruptions and inflation. “We work with customers from small and medium enterprises up to large corporates on the sums insured and try to explain what inflation means for that and what under-insurance means if they don't declare the sum insured, proactively and openly,” he said. “Another point that we have, of course, on the radar is the weather condition – NatCat events and climate change. We will continuously be focusing on this, and we're going to have some product innovation there,” Philippi told Insurance Asia. MSIG Asia has already begun innovating in response to these challenges, exploring parametric offerings for industries like farming and investing in predictive climate change modeling fintech startups to enhance risk assessment.

Insurance Asia 13

CEO INTERVIEW

Travel insurance sales in Hong Kong soar after unprecedented holiday boom

506,953 residents flew out of Hong Kong on 23 December alone, up 1,727.56% from the previous year. HONG KONG | by Olivia Tirona

ent-up travel demand from years of pandemic restrictions led to a surge in travel amongst Hong Kongers during the holiday season, significantly increasing the demand for travel insurance. For instance, in December 2023, 1.32 million Hong Kong residents traveled, with a notable trend of longer trip durations, indicating a desire for more immersive experiences after prolonged travel limitations, according to Jim Qin, CEO of General Insurance at Zurich Insurance (Hong Kong). This rise in travel contributed to a highly competitive and dynamic travel insurance market, with substantial growth driven by consumer awareness of travel risks and a demand for quality coverage. "This suggested that people were willing to take extended vacations, possibly due to the desire for a more immersive travel experience after being deprived of travel opportunities for an extended period,” Qin told Insurance Asia. An Allied Market Research report said Asia Pacific’s travel insurance market was estimated to record $9.9b in 2022. In another research conducted by Ancileo, the global market size for travel coverage could reach $50b by 2025. Digital platforms have facilitated this expansion, with personalised insurance policies tailored to individual needs. The Asia Pacific travel insurance market is expected to grow by 17% over the next five years, with Japan, Bangladesh, and India as key players. Additionally, the World Travel & Tourism Council (WTTC) forecasts a robust recovery for the region’s travel and tourism sector, surpassing pre-pandemic revenue levels. In response to these trends, Zurich Hong Kong has focused on digital innovation, partnering with Hutchison Telecommunications Hong Kong (HTHK) to offer seamless, digital travel insurance solutions. Collaboration A recent milestone with Zurich Hong Kong is its collaboration with Hutchison Telecommunications Hong Kong (HTHK). This partnership combines Zurich’s digital insurance skills with HTHK’s telecom expertise, targeting tech-savvy consumers. Customers can now purchase Breezy Travel Insurance and data roaming services in under five minutes via a fully digital platform, highlighting Zurich’s dedication to digital innovation and customer convenience amidst the pandemic’s challenges. Zurich Hong Kong said it puts digitalisation forward to upgrade processes and maintain business sustainability despite external interruptions. “During the COVID-19 pandemic, many insurance companies were unable to provide e-service options for intermediaries, leading to disruptions in business operations. In response to this challenge, Zurich took proactive steps to standardise our e-delivery sales model 14 Insurance Asia

People were willing to take extended vacations, possibly due to the desire for a more immersive travel experience after being deprived

and enhance our suite of self-service capabilities,” said Qin. “This allowed our business partners to easily quote new business, submit relevant documents in digital formats, and update policies without any interruption from external factors,” he added. Outlook The global travel insurance market, valued at $19.14b in 2022, reached $22.44b in 2023 with a compound annual growth rate (CAGR) of 17.3%, according to a report by Research and Markets titled “Travel Insurance Global Market Report 2023.” The Russia-Ukraine war disrupted global economic recovery from the COVID-19 pandemic, leading to economic sanctions, commodity price surges, and supply chain disruptions. Despite these challenges, the travel insurance market is expected to grow to $40.58b in 2027 at a CAGR of 16.0%. It is noteworthy that Asia-Pacific dominated the travel insurance market in 2022. And whilst the rise in tourism contributes to market growth, travel insurance provides financial assistance for medical emergencies, passport loss, flight cancellations, and lost luggage, which remains top of mind for travellers.

Jim Qin, CEO of General Insurance at Zurich Insurance

Insurance Asia 15

INDUSTRY INSIGHT: INSURANCE DEMAND Global total insurance premium real growth rates by region

Source: Swiss Re Institute Sigma Research 6/23

Insurance underwriting falters under global stagflation A Swiss Re Institute analyst underscored that real premium growth in emerging markets, including China, outpaces the more advanced economies. APAC

n anticipated global economic slowdown could put insurers in a time machine back to a 1970s-style stagflation scenario, beating down underwriting performance. This could potentially entail setbacks on the insurer’s liquidity, capital, and shareholder equity. Swiss Re Institute’s (SRI) chief economist for Asia Pacific, John Zhu, warns that insurers find themselves at a crucial juncture, requiring strategic adjustments to navigate the shifting economic landscape. “I think some slowdown, maybe just mechanically, from one year to the next, is going to happen. The US Federal Reserve, through raising interest rates sharply in 2023, tried to slow down the economy so that inflation can come back to target,” Zhu said in an interview with Insurance Asia. Zhu outlined that global economic growth is projected to fall to 1.7% this year, stemming from deceleration in major economies like the US, the Euro area, and China. This slowdown, while hinting at a

16 Insurance Asia

Within Asia, there are economies that we forecast will go faster

John Zhu

potential dip in short-term insurance demand, comes with nuances. The US, resilient in 2023, deliberately slowing its economy, and China experiencing a slower-thanexpected recovery, present a mixed bag of challenges and opportunities. “China is a slightly different case, it had a relatively strong rebound, at least initially, at the start of 2023, as it reopened from some of the strict COVID restrictions they had, which has now been normalised. And it's now become evident that this economic recovery is slightly slower than maybe some have expected. And for 2024, again, we expect a slight slowdown in China's GDP growth,” Zhu said. Whilst acknowledging the potential for slower growth in insurance demand, he pointed out that certain Asian economies, like Taiwan, are poised for accelerated growth in 2024. “Overall, we still see growth in premiums in a lot of the emerging markets. The slowdown we’re seeing in Asia is slightly less of a concern. Because within Asia, there are economies that we forecast will go

faster,” said Zhu. “In the coming year, for example, an economy like Taiwan, is showing signs that manufacturing and the electronics cycle may be turning by 2024, in which case its GDP growth accelerates and is likely to be one of the economies that grow faster in 2024. That again, should be positive for insurance demand as well,” he added. This regional disparity suggests that insurers, particularly in emerging markets, might find pockets of growth even amid the broader economic slowdown. Horizon for emerging markets Zhu's relative optimism extends to emerging markets, especially in APAC where he predicts robust growth in premiums. Citing figures from the sigma report, he highlighted a significant divergence between advanced and emerging markets. In SRI’s first sigma report of the year, it is projected that non-life real premiums in China will experience approximately 5.6% growth in 2023, with a similar trajectory expected in 2024 and 2025. “The exit from the pandemic has boosted insurance demand. For example, motor premium growth has normalised after adjusting due to motor sector reforms,” the report said. Structural economic weakness nonetheless translates into a growth profile that is clearly below historical trends (11.5% on average from 2016 to 2020). In any case, Chinese premiums are forecast to grow faster than those in other emerging markets (1.0% in 2023)” it added. Real premium growth rates in emerging markets, including China, outpace those in advanced markets. With figures indicating 6.5% growth in China compared to the global average of 1.4%, insurers may find lucrative opportunities in less developed markets with higher growth potential. Likewise, a report from GlobalData showed that China’s life insurance market is projected to jump 9.6%, “supported by economic recovery, conducive regulatory developments, and increased awareness of health and financial planning after the pandemic, which led to a rise in the demand for whole life and personal accident and health (PA&H) insurance policies.”

Insurance Asia 17

CASE STUDY: AI TRANSITION

To lead and to lag: APAC insurance’s conflicted AI journey

Investments in APAC account for 24% of the total AI market size, yet 41% still cling to outdated tech. APAC

rtificial intelligence (AI), particularly generative pre-trained transformer (GPT)-based models, is expected to significantly impact the insurance sector by enhancing claims processing and underwriting. Despite the promise of AI, the industry faces challenges from outdated legacy systems, which are still in use by 41% of companies. Joseph Yew, chief information officer of MSIG Asia, advocates for collaboration between traditional insurers and insurtech firms to overcome these technological hurdles.

Traditional insurers burdened by legacy systems could partner with insurtech firms to utilise technology that they may struggle to develop inhouse

Not a solo game Whilst Yew is optimistic about the insurance sector's transformation, he also notes how insurers seem to be lagging behind this new-age technology, begging the need to be assisted in their transition. “The insurance industry is not a solo game. Traditional insurers burdened by legacy systems could partner with insurtech firms to utilise technology that they may struggle to develop in-house,” Yew pointed out. “This enables collaboration to develop efficient processes, improve customer offerings and new technology-based insurance products.” Streamlining work systems Companies, particularly in agency/

Joseph Yew

Number of systems used for all insurance operations

Source: The State of Modern Insurance Technologies 2024, Novidea

18 Insurance Asia

broker management and policy administration, typically use an average of five systems for complex operations like claims, billing, and underwriting. In larger firms with over 5,000 employees, 76% manage six to 10 systems or more, often relying on legacy systems averaging four years in use, according to Novidea’s The State of Modern Insurance Technologies 2024 report. The main issues with multiple systems include high maintenance costs, inefficiency due to various logins, and time and resource consumption. Scalability concerns are also prevalent with current technologies. In terms of AI, investments in the Asia Pacific region alone account for 23.93% of the total AI market size, according to a report by communitydriven prompt management tool AIRPRM with data from OECD and the World Bank. These factors suggest a shift in the late-stage credit cycle, prompting the recommendation that insurance portfolios align with liability targets. However, Yew cautions against neglecting the human interface in the digital consumer journey, emphasising the need to balance personalisation and data protection. “Another set of technologies gaining much prominence among insurers in Asia, though not necessarily

innovative, are technologies used to enhance the customer experience. Investment in CX solutions that simplify the purchase and renewal process, embedding it seamlessly into the customer journey, and providing the human touch when it is required will be the order of the day,” Yew said. The rise of co-pilot work solutions powered by generative AI is predicted to shape the future of work in 2024. This approach enhances creativity, productivity, and efficiency. Yew said he believes the forecast for insurtech investments in Asia remains positive, with the region leading the way in digitalisation. A PwC global report predicts a compound annual growth rate of 36.5% from 2019 to 2024, reaching $10.14 billion. Key drivers include the adoption of cloud computing, AI, big data analytics, and the Internet of Things (IoT) to enhance customer experience. AI in the dynamics Yew noted a growing demand for health insurance products, leading to insurers offering more comprehensive and flexible coverage. This includes value-added services such as telemedicine, wellness programmes, and preventive care. Additionally, there is a rising awareness of Environmental, Social, and Governance (ESG) issues, with insurers aligning practices and products with ESG principles. MSIG, for instance, collaborates with tech partners like Dedoco, Embed Global, and Hillridge to combat cyber threats and venture into new markets, showcasing the industry's commitment to embracing technology. Insurers in the region also adapt to the evolving market by focusing on a customer-centric approach. “Insurance companies in Asia are facing a rapidly evolving market where customer expectations and preferences are shifting towards more personalised, convenient, and transparent services. The bar is raised in 2024. To adapt to these changes, insurers need to adopt a more customer-centric approach that focuses on delivering value," Yew said.

Insurance Asia 19

INSURANCE RANKINGS

Great Eastern Life takes the lead in this year's insurance rankings

Singapore’s top 50 insurers see 3.7% YoY asset decline Experts’ industry outlook for 2023-2024 centre on digital evolution with AI, protection gaps, strategic partnerships, and resilience amidst challenges. SINGAPORE | by Olivia Tirona

ingapore's top 50 insurers saw their assets shrink by 3.7% in 2022, a stark contrast to the 5.1% growth recorded in 2021, as seen in Insurance Asia’s Rankings. Thanks to changing economic conditions, rising inflation, and geopolitical uncertainties, the life insurance business was a huge disappointment with a 4.1% year-on-year (YoY) dip. Bucking this trend are Singapore’s general insurers, who saw a modest 9.7% growth, as reported by the Ministry of Trade and Industry. The rankings compiles an annual roster of the 50 leading insurance companies in Singapore, based on their assets. The information is sourced from the annual statistics provided by the Monetary Authority of Singapore (MAS), with the latest rankings reflecting data from 2022 and making YoY comparisons. The annual rankings saw 21 life insurers, 23 general insurers, four life reinsurers, and two general reinsurers in the top 50 list. Amongst the top 10 insurers, seven saw contractions in their annual increments whilst only two recorded growth, and the other saw no statistical change. Keeping the top 20 Insurance Asia

Swetansha Chauhan

SCAN FOR FULL STORY

spot as last year was Great Eastern Life, despite a 1.52% YoY shortfall in its assets. AIA Singapore also stood firm at second place, amidst a drop in assets by 11.45% YoY. At third place was Prudential Singapore, followed by Income Insurance at fourth place, and then Manulife, which countered the trend by inching up 0.64% YoY in its assets. Prudential Singapore and Income Insurance both saw contractions of 7.15% and 9.44%, respectively. Amongst the top ten, Singlife recorded the largest growth of 6.91% YoY at sixth place. The rest in the top 10 all saw negative increments in their YoY assets: Tokio Marine Life at seventh place, HSBC Insurance at eighth place, HSBC Life at ninth place, and Etiqa at 10th place. The state of premiums In 2022, the aggregated new business premiums in the direct life insurance sector experienced a 4.1% fall to $6.3b, data from the Economic Survey of Singapore 2022 showed. Notably, the single premium business saw a more pronounced decrease of 9.4%, amounting to $23.5b, whilst the regular premium

business exhibited a modest decline of 0.6%, reaching $3.9b. The net income of the direct life insurance industry exhibited a significant contraction, plummeting from $1.6b in 2021 to a $1.5b in 2022, primarily attributed to a reduction in investment income. Conversely, in the general insurance industry, gross premiums recorded a notable increase of 9.7%, totalling $18.3b in 2022. This growth was driven by contributions from both offshore and domestic businesses, accounting for $12.9b and $5.4b, respectively. However, the operating profit of the industry in 2022 experienced a decline, amounting to $500m, down from $1.2b in the preceding year. This reduction was primarily attributed to a decrease in investment income. The general insurance industry is anticipated to grow at a 5.8% compound annual growth rate (CAGR), to SG$7.35b (US$5.5b) in gross written premiums (GWP) by 2028, as forecasted by GlobalData. Swetansha Chauhan, an insurance analyst at GlobalData, noted that the industry’s growth is expected to slow from 2023 onwards. “Changing economic conditions, rising inflation and geopolitical uncertainties have led to sluggish growth in all general insurance lines of business, which is expected to slow down the overall industry growth in 2023,” Chauhan said. She added that Singapore’s general insurance penetration at 0.8% in 2022 indicates substantial growth potential compared to other APAC countries. This anticipation of growth will be on the back of increased health insurance demand, mandatory fire insurance, and rising premiums due to inflation are expected to support the industry’s growth over the next five years. The life industry holds the same fate, with a forecasted CAGR of 9.8% from SG$62.9b (US$47.2b) in 2022 to SG$100.4b (US$77.0b) in 2027 in terms of GWP, according to GlobalData. In 2022, the industry experienced a notable growth of 13.3%, with a projected growth of 10.9% in 2023. The surge is attributed to heightened awareness of financial planning post-pandemic, leading to increased demand for protection products such as term and whole life insurance.

INSURANCE RANKINGS LIFE

2022 Total Assets (SG$) $71.1b

2021 total assets (SG$) $72.2b

LIFE

$52.4b

$59.2b

LIFE

$51.5b

$55.5b

LIFE

$39.2b

$43.3B

MANULIFE

LIFE

$32.7b

$32.5b

SINGAPORE LIFE

LIFE

$12.3b

$11.5B

TOKIO MARINE LIFE

LIFE

$10.6b

$11.6b

HSBC INSN

LIFE

$9.1b

$11.3b

HSBC LIFE

LIFE

$4.4b

ETIQA PL

LIFE

$3.7b

UTMOST INTERNATIONAL

LIFE

$2.4b

TRANSAMERICA

LIFE

$1.9b

$3b

INCOME

GENERAL

$1.3b

$1.5b

SWISS LIFE

LIFE

$1.1b

$1.2b

ST. JAMES'S PLACE

LIFE

$1b

$1.1b

FRIENDS PROVIDENT

LIFE

$1b

$1.2b

FIRST CAPITAL

GENERAL

$970.8m

$949.1m

CHINA TAIPING

LIFE

$881.6m

$809.7m

SWISS RE ASIA

LIFE/REINSURER

$873.7m

$645m

CHINA REINSURANCE

LIFE/REINSURER

$692.6m

$747.6m

MONUMENT

LIFE

$686.9m

MUNICH RE

LIFE/REINSURER

$602.1m

$1b

MSIG

GENERAL

$565.6m

$560.7m

AIG ASIA

GENERAL

$526.2m

$496.9m

INDIA INTERNATIONAL

GENERAL

$509.3m

$533.9m

CHINA LIFE

LIFE

$469.3m

$508m

LIBERTY INSURANCE

GENERAL

$464.4m

$424m

CHUBB INS

GENERAL

$445.5m

$424m

SWISS RE ASIA

GENERAL/REINSURER

$437.5m

$136.8m

TOKIO MARINE INS

GENERAL

$430.6m

$443.8m

LLOYD'S ASIA SCHEME

GENERAL

$423m

$389.9m

CHINA TAIPING

GENERAL

$399.6m

$444.2m

GEG

GENERAL

$381m

$314.3m

CIGNA EUROPE

GENERAL

$325m

$262.7m

UTMOST WORLDWIDE

LIFE

$294.2m

$372.7m

QBE INS

GENERAL

$245m

$225.6m

SOMPO INS

GENERAL

$232m

$226.7m

UOI

GENERAL

$230.6m

$246.8m

ALLIED WORLD

GENERAL

$228.4m

$207.3m

XL INS

GENERAL

$219.8m

$230.3m

FACTORY MUTUAL

GENERAL

$217.6m

$194.3m

ALLIANZ GLOBAL C&S

GENERAL

$210.6m

$191.8m

HSBC LIFE

GENERAL

$203.3m

RGA INTL

LIFE/REINSURER

$199.2m

$192m

2023 Rankings

Insurance Company

2022 Rankings

Classification

GREAT EASTERN LIFE

AIA SPORE

PRUDENTIAL

INCOME

SUN LIFE

LIFE

$194.3m

$86.4m

ETIQA PL

GENERAL

$181.3m

$173.7m

SINGAPORE RE

GENERAL/REINSURER

$169.9m

$170.9m

ZURICH

GENERAL

$156.4m

$133.8m

EQ INS

GENERAL

$153.1m

$135.4m

FWD SINGAPORE

LIFE

$153m

$85.3m

TOTAL

$309.1b

$320.8b

3.66% increase from last year’s rankings

Insurance Asia 21

INSURANCE RANKINGS

Hong Kong’s top 50 insurers experience 7.7% YoY premium contraction Analysts said the market’s complex financial environment and shrinking population curtailed industry growth. HONG KONG | by Olivia Tirona

he slimming appetite for linked products, decreased population size, and market uncertainty, have dragged the premiums of Hong Kong’s top 50 insurers by 7.7% year-on-year (YoY) in 2022, the Insurance Asia Rankings revealed. In total, the top companies saw their premiums reach HK$511.7b, smaller than the HK$554.2b in 2021. “In 2022, the linked products business decreased by over 50%, in terms of premiums industry-wide. This reflects this lower demand because the financial markets didn’t do well. And so people don’t want to buy insurance-linked products Assistant Professor Ben Charoenwong, from the Department of Finance at NUS Business, told Insurance Asia. Complex financial environment The drop in overall premiums is linked to complexities in financial markets. Both stocks and bonds faced significant losses simultaneously, leading potential policyholders to adopt a cautious stance. “Of course, the funny thing for me — someone who studies the financial markets — is typically after you have a bad year, it tends to be better afterwards. And so you might want to start products when the

Ben Charoenwong

SCAN FOR FULL STORY

AIA International takes the lead in this year’s insurance rankings

22 Insurance Asia

price falls rather than avoid them,” Charoenwong said. He said he anticipates a potential rebound in demand as market sentiment stabilises. Nevertheless, persistent demographic factors, including business closures and population shifts out of Hong Kong, may present a lasting obstacle to a complete recovery. Segments and premiums To tally, 26 life or “long-term” insurers were included in this year’s rankings whilst 24 general insurers were counted. The life segment, which accounts for 91.3% of the rankings’ grand total, fell 8.9% YoY. On the other hand, Hong Kong’s top general insurers, 8.7% of the total, expanded by 7.1%. Out of the top 15 insurers in Hong Kong, only five saw their premiums grow YoY. Namely, HSBC Life (third place, 33.3%), Hang Seng Insurance ( eighth, 36.8%), FTLife (11th, 27.6%), AXA General (14th, 4.0%), and Chubb Life (15th, 1.8%). In terms of premiums accumulated, at first place is AIA International, which saw its 2022 premiums dip 14.8%. Trailing behind is Prudential Life at 2nd place, which also contracted by 12.0%. Insurers that followed were Manulife (4th, -22.8%), China Life (5th, -24.5%), AXA

China (Bermuda at 6th place, -5.6%), BOC Life (7th, -10.6%), FWD Life (Bermuda at 9th, -23.8%), TPLHK (10th, -7.8%), Sun Life (12th, 23.6%), and YF LIFE (13th, 2.5%). Long-term trends Examining the long-term trends, Charoenwong highlighted the impact of the ageing population in Asia on the insurance industry. As the workforce shrinks and older individuals seek coverage, a potential decline in premiums is expected over time. Hong Kong, being a mature financial market, may already have a significant portion of its population covered. This demographic shift places a burden on insurers, necessitating strategic expansion beyond borders to mitigate the impact of an ageing population. “Hong Kong is already a decently developed financial market. Many people may already have insurance, right? So then the only effect they might see is this kind of mega trend of decreasing premiums over time, just because there are just fewer people. We kind of saw this in Japan. And that’s part of why Japanese insurers worked hard to expand across borders, to try to go to Vietnam, the Philippines and so on. Because their population is ageing,” Charoenwong stated. What insurers are doing to catch up To stay competitive, traditional insurers must improve their digital infrastructure, invest in user-friendly apps and websites, and streamline their claims processes. Whilst the transition may present challenges for incumbents, Charoenwong views these changes as beneficial for consumers, ensuring a more efficient and seamless insurance experience. Insurers are also pursuing digital transformation to catch up with changing customer expectations. The rise of virtual insurers accelerated the adoption of digital tools, such as chatbots and e-signatures.

INSURANCE RANKINGS 2023 Rankings

Insurance Company

2022 Rankings

Classification

2022 Premiums (HK$)

2021 Premiums (HK$)

AIA International

LONG-TERM

$88.8b

$104.2b

Prudential (HK) Life

LONG-TERM

$68.4b

$77.8b

HSBC Life

LONG-TERM

$58.6b

$44.0b

Manulife (Int'l)

LONG-TERM

$46.8b

$60.6B

China Life

LONG-TERM

$35.7b

$47.3b

AXA China (Bermuda)

LONG-TERM

$27.2b

$28.9B

BOC LIFE

LONG-TERM

$23.8b

$26.7b

Hang Seng Insurance

LONG-TERM

$22.9b

$16.8b

FWD Life (Bermuda)

LONG-TERM

$21.8b

$28.6b $17.4b

TPLHK

LONG-TERM

$16.0b

FTLife

LONG-TERM

$14.2b

$11.2b

Sun Life Hong Kong

LONG-TERM

$9.9b

$12.9b $9.1b

YF LIFE

LONG-TERM

$8.9b

AXA General

GENERAL BUSINESS

$4.4b

$4.3b

Chubb Life

LONG-TERM

$4.3b

Bupa

GENERAL BUSINESS

$4.0b

$4.1b

Fubon Life Hong Kong

LONG-TERM

$3.4b

$2.3b

AXA China (HK)

LONG-TERM

$3.3b

$3.7b

CTPI(HK)

GENERAL BUSINESS

$2.7b

$2.6b

Zurich Insurance

GENERAL BUSINESS

$2.6b

$2.4b

HKMCI

GENERAL BUSINESS

$2.6b

$3.0b

HKMC Annuity

LONG-TERM

$2.5b

$3.0b

AIA Everest

LONG-TERM

$2.3b

$4.4b

AIG Insurance HK

GENERAL BUSINESS

$2.1b

$1.9b

Asia Insurance

GENERAL BUSINESS

$2.1b

$1.9b

Generali

GENERAL BUSINESS

$1.9b

$1.7b

AIA International

GENERAL BUSINESS

$1.9b

$1.7b

BOC Group Insurance

GENERAL BUSINESS

$1.9b

$1.6b

XL Insurance

GENERAL BUSINESS

$1.8b

Chubb Insurance

GENERAL BUSINESS

$1.8b

$1.6b

CIGNA Worldwide General

GENERAL BUSINESS

$1.6b

$1.2b

AGCS SE

GENERAL BUSINESS

$1.5b

$1.2b

TPRe

GENERAL BUSINESS

$1.4b

$1.5b

Liberty Int'l

GENERAL BUSINESS

$1.4b

$1.3b

FWD Life (HK)

LONG-TERM

$1.3b

$1.8b

Zurich International

LONG-TERM

$1.2b

$1.4b

CMBWL

GENERAL BUSINESS

$1.2b

$0.9b

Hong Kong Life

LONG-TERM

$1.2b

$1.8b

Blue Cross

GENERAL BUSINESS

$1.2b

$1.1b

QBE HKSI

GENERAL BUSINESS

$1.1b

PICC (HK)

GENERAL BUSINESS

$1.1b

$0.8b

TLIC

LONG-TERM

$1.1b

$1.3b

AXA China (HK)

GENERAL BUSINESS

$1.0b

AIA (HK)

LONG-TERM

$979.9m

$1.0b

MSIG Insurance

GENERAL BUSINESS

$978.5m

$961.1m

Prudential (HK) General

GENERAL BUSINESS

$975.2m

$954.5m

CNOOC Insurance

GENERAL BUSINESS

$966.6m

$638.1m

Principal

LONG-TERM

$878.9m

$998.8m

Blue

LONG-TERM

$815.8m

$1.3b

Chubb Life HK

LONG-TERM

$807.1m

TOTAL

$511.7b

$554.2b

7.7% decrease from last year’s rankings

Insurance Asia 23

CASE STUDY: RAIN INSURANCE

The Rain Resist Bliss Package includes a 24/7 butler service and access to the club's hotel lounge

InterContinental SG is saving insurance for a rainy day NUS Professor Charoenwong discusses the effectiveness and value of a Singaporean hotel’s rain insurance offer. SINGAPORE

ingapore’s hospitality industry is no stranger to innovation, but the recent release of a rain coverage package by a leading hotel chain marks a unique venture into the realm of insurance. According to Assistant Professor Ben Charoenwong from the National University of Singapore (NUS), this offering challenges traditional insurance models, particularly in the hospitality sector, by intertwining risk management with customer satisfaction. “It’s really a marketing component. If you’re in the hospitality sector, your sales are pretty cyclical. More people visit during peak season, whereas during non-peak, season there are fewer people. The hope here is with some marketing, if it rains, you would come to visit the place more often,” Charoenwong told Insurance Asia magazine in an exclusive interview. “But it seems to be this exercise to financial life. Once a product is created, there will be initial variations — serving the business purpose as a marketing component. At first, it seems to be offered free to the customers, right? But nothing is really free. It’s baked into the price [...] But with this type of insurance, maybe consumers can take the chance and stay at the hotel thinking

24 Insurance Asia

With this type of insurance, maybe consumers can take the chance and stay at the hotel thinking the worst-case scenario would rain

Ben Charoenwong

the worst-case scenario would rain,” Charoenwong said. Take InterContinental Singapore, for example, a 5-star hotel located in Singapore's historic centre, which has teamed up with insurtech discovermarket to introduce the Rain Resist Bliss Package, a first-of-its-kind rain protection offering. Guests booking this package are eligible for a refund equivalent to their single-night room rate if it rains during their stay. If rainfall exceeds a cumulative two-hour duration during daylight hours, triggering a recorded rain event, hotel guests will automatically receive a rebate voucher within seven working days. The package offered is exclusively available for suite room bookings starting at SG$850 a night. Guests opting for this package can avail themselves of additional benefits such as 24/7 butler service and access to the hotel’s club lounge. Rain or shine The primary allure of this rain coverage package lies in its marketing potential. With hospitality sales often fluctuating due to seasonal variations, the aim is to attract visitors during less appealing weather conditions by offering compensation for rainy days. In January alone, Singapore saw a

surge in travellers, totalling over 1.44 million, marking a 54.2% increase compared with the same period in the previous year. Despite this growth, visitors opted for shorter stays, as revealed by data from the Singapore Tourism Analytics Network collected until 31 January 2024. Of the total influx, approximately 1.07 million were overnight visitors, showing a substantial rise of 43.6% from the previous year. However, the average length of stay experienced a notable decline of 20.1%, dwindling to just 3.45 days in January 2024 compared to the 4.32 days recorded for January the previous year. Pricing model Initially offered as a complimentary service, the cost of rain coverage is inevitably factored into the overall package, subtly shifting the risk burden from the customer to the hotel. This shift raises questions about actuarial considerations, especially concerning weather forecasting and data analysis, said Charoenwong. Whilst forecasting accuracy for short-term weather predictions is relatively high, long-term forecasting remains challenging, particularly when booking vacations months in advance. Singapore experienced notable weather patterns in 2023, with above-average rainfall contributing to the island’s seventh wettest year since 1980. The annual total rainfall averaged across islandwide stations was 2,866.1 mm, marking a 13.1% increase compared with the longterm average of 2,534.3 mm. Is it worth it? Focusing on the financial aspect, Charoenwong drew parallels with extended warranties. “In some sense from a financial perspective, it’s like an extended warranty [...] Research on this suggests that, on average, extended warranty is not worth it,” he said. “Beyond the actuarial risks, what is the risk of rain in Singapore? But beyond that, there's a concern that the only people who will care about these products, you know, are if they're going to be adversely selected. In some sense, these are the people who were already likely to have travelled during the rainy season,” he added.

CMY

Embedding protection at the point of need Headquartered in Singapore with an international footprint, bolttech connects insurers, distribution partners and customers to make it easier and more efficient to buy and sell insurance. bolttech is building a global technology-enabled ecosystem for embedded insurance, enabling all kinds of businesses to seamlessly add insurance to their customer journeys. Leveraging our proprietary technology and deep insurance expertise, we work with over 230 insurers and 700 distribution partners across 30+ markets in Asia, Europe and the United States to close the protection gap worldwide. Discover how our world-leading ecosystem for protection and insurance can help you unlock new opportunities. Find out more at bolttech.io or contact us at enquiries@bolttech.io

Insurance Asia 25

COUNTRY REPORT: PHILIPPINES

How Singlife fights low insurance penetration rates It offers embedded insurance products through digital wallets like GCash.

he Philippines’ low insurance penetration, albeit a narrower figure than the previous year’s, is compelling insurers to transcend their offerings into a more viable option for the everyday Filipino, such as electronic wallets. With embedded insurance expected to skyrocket $270b (P14.99t) in gross written premiums by 2030, insurers like Singlife have been trickling their way to fill these protection gaps.

Low insurance penetration “To put this into perspective, we understand that the insurance penetration rate in the Philippines is at only 1.75%. This means that a majority of Filipinos are at risk for financial distress during unforeseen circumstances like medical emergencies, which potentially affects their finances for children’s education, and for their retirement,” Richard Vargo, Singlife Group head of products, propositions and transformation, told Insurance Asia. On the other hand, data from the Philippines’ Insurance Commission showed that insurance penetration, or the premium volume as a share of gross domestic product or contribution of the insurance sector to the national economy, as of September 2023 stood at 1.68%,

smaller than the 1.81% in the previous year.

Reynaldo A. Regalado

Jérôme Jean Haegeli

What troubles the Filipinos? Insurance Commissioner (IC) Reynaldo A. Regalado emphasised the importance of financial inclusion and consumer protection at the Professional Insurance and Financial Advisors Association of the Philippines (PIFAAP) annual convention held last year. Regalado urged financial advisors to tailor insurance and financial solutions to better meet the needs of Filipino consumers, promoting financial inclusion in the country. He also highlighted the government’s support for private sector initiatives to make financial products and services more accessible. Whilst acknowledging the increase in premium collection by the insurance industry, Regalado noted the significant protection gap in the country, particularly among the vulnerable poor facing risks from natural calamities. The nine months to September period saw the country’s net earnings jump 9.4% year-on-year (YoY) to P38.2b ($688m). Total premiums also climbed 2.8% YoY to P289.6b ($5.22b). To address this, the IC has actively promoted micro-insurance as

Customers can purchase digital insurance products through the GCash app (Photo from Singlife)

26 Insurance Asia

financial protection, covering risks like accidental death, injury, and property damage. As of the first quarter of 2023, 51.7 million Filipinos are insured under some form of micro-insurance. Climate change Swiss Re Institute identified the Philippines and the US as currently the most economically exposed countries, with high probabilities of hazard intensification due to climate change. The Philippines stands out as the most impacted country by the four major weather perils of all 36 countries analysed, experiencing annual economic losses equivalent to 3% of GDP. Climate change is expected to have a significant impact on economic losses in the future, with certain countries already highly exposed to weather-related hazards. Thus, risk reduction through adaptation can enhance insurability, with the insurance industry ready to play a crucial role by catalysing investments in adaptation projects and sharing risk knowledge. “Climate change is leading to more severe weather events, resulting in increasing impact on economies. Therefore, it becomes even more crucial to take adaptation measures. Risk reduction through adaptation fosters insurability,” Jérôme Jean Haegeli, Swiss Re’s group chief economist, said in a press release. “The insurance industry is ready to play an important role by catalysing investments in adaptation, directly as a long-term investor and indirectly through underwriting climatesupportive projects and sharing risk knowledge. The more accurately climate change risks are priced, the greater the chances that necessary investments will actually be made.” Haegeli observed. Fast-growing Asian economies like Thailand, China, India, and the Philippines are identified as particularly vulnerable. Looking ahead, floods are projected to intensify globally, while tropical cyclones remain a significant driver of economic losses, especially Asia. Implementing adaptation measures such as enforcing building codes and increasing flood protection will be crucial in reducing loss potential and mitigating economic impacts.

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Insurance Asia 27

INDUSTRY INSIGHT: EMERGING MARKETS

Why emerging markets in the region are most vulnerable to insurance risks Analysts have named five risks that the Asian insurance sector will have to navigate in the coming months.

nsurers in the Asia-Pacific region are facing significant challenges due to three reasons—political instability, immature legal frameworks, and weaker regulatory environments in developing markets. Experts emphasise the need for insurers to be really smart about managing risks and adapting quickly to changes. For instance, in places like India and Indonesia, the rules around foreign investments are slowly loosening, which adds another layer of complexity for insurers operating there. “I think it's fair to say that the developing markets are more exposed to geopolitical risks than the mature markets. Typically, a developing market is more likely to have a less stable government and internal factions within the population, which can have a spillover effect on the country’s prosperity, including lower gross domestic product (GDP). These factors can also make developing markets more susceptible to being a pawn in a bigger player’s manoeuvres,” Anna Tipping, Norton Rose Fulbright Partner and Head of Asia Insurance told Insurance Asia. Angela Rowley, Chief Risk Officer at FWD Life Philippines separately told Insurance Asia that although the markets in the region are at snailpace, there are multiple strategies to overcome these risks. Combining Rowley and Tipping’s perspectives, these risks are summed up to five: geopolitical, climate change, ageing population, financial literacy, and cyber-related issues. Geopolitical shifts Multinational insurers entering these markets must navigate these hurdles whilst respecting local regulations and potentially facing a two-tier system where domestic players receive preferential treatment. It is a delicate balance that demands a nuanced approach, experts warn. These insurance players need to have robust policies and procedures in place for scenarios such as writing or ceasing coverage for a particular country and managing currency and 28 Insurance Asia

Insurers should pay close attention to regulatory shifts based on geopolitical issues

A developing market is more likely to have a less stable government and internal factions within the population, which can have a spillover effect on the country’s prosperity

Anna Tipping

Angela Rowley

convertibility risks. In addition, insurers should also be able to readily address coverage needs in wars, trade sanctions, and supply chain disruptions. Climate change From a climate change perspective, insurers must anticipate the following implications for their business: Will we see an increase in natural disasters, typhoons, and windstorms? The rising climate-related risks challenge insurers to assess whether their current policies sufficiently cover or exclude these eventualities. As climate change evolves, new threats may emerge, including crop failures and changing business dynamics. Insurers must remain vigilant and adaptable to accommodate these emerging challenges, said the experts. Strategies for navigating risks Tipping offers insightful strategies for insurers to navigate geopolitical risks effectively. First and foremost, it is essential to conduct thorough due diligence and stay informed about the political climate in the regions where they operate. “Be aware, be informed, and conduct appropriate diligence. Be prepared to move fast, whether it's

putting people into or moving out of a country, or stopping writing risks from a country or region. Other considerations include having appropriate wording and policies to protect the firm from currency inconvertibility. Active monitoring of sanctions and appropriate KYC and AML checks as conduct that leads to these measures being imposed is often a byproduct of geopolitical instability,” Tipping said. Smaller insurers have an advantage in their ability to act swiftly compared to large multinational corporations that may be hindered by global mandates. Regulatory shifts and their impact In the Asia Pacific region, regulatory shifts play a significant role in the insurance landscape. Over the past decade, one of the most notable changes has been the increased acceptance of foreign direct investment. Whilst restrictions on foreign investment still exist in some countries, like India and Indonesia, these policies are slowly being relaxed. “For example, while India has a requirement that there be Indian management control of insurers, foreign direct investment of up to 74% of paid-up capital is now permitted,” Tipping said.

Insurance Asia 29

EVENT NEWS: INSURANCE ASIA FORUM HO CHI MINH Nguyen told the panel at the Insurance Asia Forum. This shift requires insurance companies to rethink their traditional and often outdated systems and move towards more agile and responsive digital solutions. Regulatory changes and competitive pressures also pushed firms to innovate to remain relevant and compliant in a fast-evolving landscape. MB Ageas Life Deputy CEO Tuan Anh Do said in Vietnamese how insurers must improve their persistence by looking at customer behaviour, seeing where the needs are and then using their ecosystem to support the needs.

Top leaders from Vietnam trade strategies on tech adoption in their respective companies

Vietnam's insurers armour up for tech challenges Insurers adopting digital tech eye double-digit growth.

echnological advancements are in full swing in the Land of Ascending Dragon, shifting consumer expectations and setting up potential double-digit growth for the insurance industry. Vietnam’s biggest industry experts were upbeat when they opened up about transformative strategies and challenges in adopting new digital tech at the Insurance Asia Forum in Ho Chi Minh City last 12 March. “In the last five years, we’ve seen a lot of events that forced the insurance industry to change and transform things,” said the forum’s moderator, Nguyen Tuan Hong Phuc of KPMG in Vietnam & Cambodia. The KPMG Partner, Head of Management Consulting, and sector lead for Insurance noted that the biggest amongst these events was the COVID-19 pandemic which forced a sudden change in customer behaviour. Present projections by GlobalData see Vietnam’s general insurance sector expanding at a compound annual growth rate (CAGR) of 6.7%, reaching $3.9b in gross written premiums by 2028, up from $3b in 2023. 30 Insurance Asia

It still needs to be physically available there on the streets and insurers meeting customers. So we got to use those savings to expand our footprint. And that also, in a way, helps build trust

Parallel to this, the country’s life insurance sector is forecasted to experience a robust CAGR of 20.8%, with gross written premiums expected to soar from $6.9b in 2021 to $17b in 2026. Transforming the insurance market The urgency for digital transformation in the insurance sector has been amplified by several external factors. Calling to mind how the pandemic accelerated the adoption of digital technologies, the panellists pointed out shifting consumer behaviour towards online services. “The most important and most challenging aspect is to change the mindset of our people in the insurance firm, which is very traditional, often very conservative. Most major names in the insurance field are proud to say that they have over a hundred years of experience. So how to transform this is really challenging for MSIG Vietnam, we have to divide it into two segments: commercial business and our retail business,” MSIG Vietnam Deputy General Director Chief Transformation Officer Phuong

Automation On cost efficiency, Vinay Dhareshwar, chief officer of Partnership Distribution & Group Business at Generali Vietnam Life Insurance, said the firm is not only focused on cutting costs or increasing profits but on automating processes, which could be a great investment. However, customer relationships cannot be automated. “[The industry] still needs feet on the ground. It still needs to be physically available there on the streets and insurers meeting customers. So we got to use those savings to expand our footprint. And that also, in a way, helps build trust,” Dhareshwar told forum attendees. Not to oversimplify things, digital transformation in insurance is not merely about adopting new technologies but reimagining the entire business process to enhance efficiency and customer service. The panellists from the forum highlighted specific objectives such as improving operational efficiencies, enhancing customer engagement, and developing new digital-first products and services. For instance, FWD Insurance is focusing on creating a seamless digital customer journey from policy issuance to claims processing, aiming to increase customer satisfaction and loyalty. FWD Insurance Chief Business Officer Dau Tien Dung, who covers Digital Commerce and IFA channels, listed three key objectives to boost customer engagement: transform to adapt to new regulations; change the negative sentiment about insurance; and data transformation.

Insurance Asia 31

OPINION

CHRIS TAN

Digital dilemma: Invest in resilience or risk disruption?

s loss prevention engineers specialising in the resilience of data centres around the world, we have visited our fair share of locations where fire, flood, and other disasters have laid waste to the very data and telecommunications networks that we have sworn to be dedicated to protecting. On the one hand, we can be grateful that cabling and servers were the only assets to suffer damage, but these scenes are a heavy blow, nevertheless. The threat is everywhere. Businesses and livelihoods hang in the balance. Clients and suppliers almost definitely face some sort of disruption, and some don’t recover. As new technologies like AI and 5G mobile services trigger a rethink on everything from medicine to how we plan holidays, extreme weather events including flooding and heat waves have become chronic. The climate stakes are rising and with it, the vulnerability of Southeast Asia’s data centres and telecommunications is coming into sharper focus than ever before. A data boom Data centres are technology hubs that crunch, save, and dispense the data that make the most convenient facets of our daily lives possible. Cashless payments, streaming services, video calls, and other services requiring electronic communication depend on data centres. Demand is booming. During the pandemic, demand for cloud computing in Singapore surged. According to GlobalData, a leading data and analytics company, the total addressable market size of data centres and hosting services in Singapore in terms of spending opportunity is set to increase at a compound annual growth rate (CAGR) of 6.1% between 2020 and 2025. Investment into new data centres in the Asia-Pacific region totalled $1.7b during the first three months of 2023 alone, eclipsing the total for all of 2022, when supply chain troubles made it tougher to secure semiconductors and other electrical components, according to findings from an April report from real estate consultancy CBRE. With most of those funds earmarked for greenfield sites and with demand for data centres exploding, the dilemma for operators will be whether to invest in new developments or boost the resilience of existing facilities to mitigate against natural disasters and other climate-related calamities. Predicting climate impact Damage caused by typhoons, flooding, as well as overheating owing to heatwaves already accounts for roughly three-quarters of accidents that lead to data centre outages according to FM Global’s internal data. The rise in extreme weather events means this is increasingly becoming a “when” not “if” scenario. While a chronic problem, extreme weather events need not be random or unpredictable. Today, loss data gathered from Asia and around the world can be used to model the impact that businesses could potentially face from a natural disaster or extreme weather event. This same data can help determine what can be done to mitigate those

32 Insurance Asia

CHRIS TAN Engineering Consultant FM Global

potential losses, supported by engineering expertise. This might include sealing roofs and windows to keep servers dry, lifting cabling away from flood-prone basements and installing proper drainage systems, especially in locations like Singapore, where heavy rain is commonplace. Similarly, it might mean isolating batteries, which keep power flowing to servers until generators kick in during blackouts, in fire-resistant rooms, and not electrical rooms near servers as is often the case. Operators would also need to consider space for backup generators and maintain a 24-hour diesel fuel supply, despite the challenge of finding pre-existing structures with the needed strength and resilience to meet these requirements. There’s a lot at stake. With more and more riding on the sector, outages are becoming more expensive if not more common. According to industry data, 60% of all outages at data centres resulted in at least $100,000 in losses in 2022, up nearly 40% since 2019, according to Uptime Institute, a US-based data centre consultancy. Underneath the numbers though are untold stories of risk and disruption. In early 2023, a water leak at the Paris Global Switch Data Centre caused fire and outages, resulting in the disruption of cloud data services. A major data centre incident at Pangyo, South Korea in 2022 was caused by lithium-ion batteries and wasn’t brought under control for eight hours disrupting consumers. The digital dilemma Most of us know what it’s like when overloaded ride-hailing apps can’t get us a taxi on a rainy Friday, or when a video conference suddenly freezes and blacks out. Few of us know what it’s like to be forced offline entirely for hours by a natural disaster, thanks in part to data centre systems that are designed and built to withstand most disruptions. But as our climate gets warmer, wetter, and less predictable, our daily lives and livelihood are increasingly at risk of being upended because the technical hubs that support them were not built with long-term considerations in mind. It’s a very digital dilemma. Do data centre operators invest in resilience now to ensure their services can cope with extreme and unpredictable climate impacts, or do they endure the fallout from business disruption when those services fail? When you think of it that way, it’s no dilemma at all.

Insurance Asia 3

CORPORATE SUSTAINABILITY ATTAINED THROUGH SERVICE EXCELLENCE

Achieve Glory and Excellence Brand Finance Insurance 100 2022

World’s Top 100 Most Valuable Insurance Brands

The Asset Triple A Sustainable Infrastructure Awards 2022

Ins�tu�onal Investor of the Year- Insurance, Asia-Paciﬁc Renewable Energy M&A Deal of the year, Global

The Asset Triple A Digital Awards 2022 Best Digital Insurance Experience Best Mobile Insurance Applica�on Best Financial Ar�ﬁcial Intelligence Project 4 Insurance Asia

Global Brands Awards 2022 Best Life Insurance Brand, Taiwan

Interna�onal Finance Awards 2022

Best Customer Experience In Digital Insurance, Taiwan Most Innova�ve Life Insurance Company, Taiwan

Insurance Asia Awards 2022

New Insurance Product of the Year, Taiwan Claims Ini�a�ve of the Year, Taiwan Health Insurance Ini�a�ve of the Year, Taiwan

Taiwan Life Insurance Co., Ltd. www.taiwanlife.com