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The Asian opportunity Has the golden age finally arrived for insurers venturing into Asia? By Wendy Pugh

THE PROMISE OF ASIA IS like an alluring siren’s song. Populations are increasing, incomes are rising and a burgeoning middle class wants to protect the homes, cars and businesses that come with wealthier lifestyles. With Asia predicted to take a rising share of the global premium pie, insurers are optimistic that the right time for investment and expansion in the region has arrived. And with traditional insurance markets in Europe and the United States still suffering on the back of the global financial crisis, impressive economic growth in Asia – led by China – is even more attractive. 38

“Global reinsurers are all interested in Asia,” Swiss Re Chief Economist Kurt Karl says. “Swiss Re is very focused on Asia and we will be here to support Australian insurance companies thinking of expanding into the Asian market.” China’s expansion has already lined the pockets of miners, but there are also plenty of warning tales from companies that have come to grief. In reality, there are few quick dollars to be made in a part of the world that has long bedazzled and sometimes burned companies which overestimate the rewards and underestimate the complexities. “The average Australian insuranceNEWS

could be forgiven for thinking that as a nation we are incredibly engaged with Asia; all we need to do is climb on board the gravy train and wait to cash the cheque from its newfound and insatiable demand for goods and services,” IAG Chief Executive Mike Wilkins told the Trans-Tasman Business Circle recently. “As the chief executive of a company that has been in Asia for 15 years, I can assure everyone it is somewhat more complex than that.” Nevertheless, the growth forecasts for the region’s insurance industry are compelling. Premium income from the Asia-Pacific region may double October/November 2013

by 2020, according to Munich Re, contributing an extra €1 trillion. The slice from “emerging Asia” – markets such as China and India – will be about €670 billion, nearly 70% of the total. China is already the world’s fourth-largest insurance market by gross written premium (GWP) in both the general and life sectors, and Zurich AsiaPacific Regional Chairman Geoff Riddell says even the most pessimistic forecasts allow for growth of 5% a year for the next three decades. Standard & Poor’s Director Financial Services Ratings Michael Vine says Asia offers diversification for insurers. A slowing of economic growth,

Profile for Insurance News (the magazine)

OCT/NOV 2013 - Insurance News (the magazine)  

QBE CEO John Neal has spoken exclusively to Insurance News about his drive to turn the global insurer’s fortunes around. Our in-depth articl...

OCT/NOV 2013 - Insurance News (the magazine)  

QBE CEO John Neal has spoken exclusively to Insurance News about his drive to turn the global insurer’s fortunes around. Our in-depth articl...