Various countries in Asia now have evolving reinsurance communities, which help grow their talent pool, keep business in the country and allow people to be educated in their home markets.
Stuart Beatty, CEO, Asia Pacific, JLT Re
Brexit, the future of the European Union and also the election of President Trump in the US have hogged the insurance media headlines since the start of 2017.
While I don’t believe any of the above will have a significant direct effect on insurance markets in Asia, some of the themes do resonate across the region.
Nationalism – and to an extent protectionism – is a characteristic of many regional markets in Asia. Regulators have always tended to focus on preventing capital leaving the country.
They quite reasonably want business to stay in the country and for people to be educated in their home markets.
It’s important to remember that most Asian markets still see themselves as independent of their neighbours and not as part of a wider market, like most European countries do.
There are no common banking or solvency rules, for example, or an over-arching regulatory framework. It’s possible that these recent events in Europe and the US will reinforce that view.
There has been some criticism recently in the press that some Asian insurance markets (for example Indonesia, China, India) are being protectionist.
Being part of the international (re)insurance community, we will have to adapt and work within that evolving regulatory environment.
The growth of Asian insurance markets
Times are changing and where once all roads led to London, regional hubs such as Singapore and Hong Kong are growing and responding, as are domestic markets in their own right.
Various countries in Asia now have evolving reinsurance communities in country.
Many regulators in Asia have imposed rules for compulsory cessions or around local market offering and minimum placement shares in country.
As long as the respective insurance market’s risk based capital (RBC) framework is appropriate and their reinsurers are solvent in the event of a major event, it shouldn’t be an issue for insurers.
Domestic markets will still seek intellectual property and capacity from the International markets to support this development.
What’s informing reinsurance buying strategy?
First, reinsurance buyers will continue to respond to regulators’ RBC requirements.
Cat models tend to be out of date or not present for some countries and the outputs are not as reliable as more mature markets.
Usually it falls upon reinsurance brokers such as JLT Re to analyse regional insurer clients’ portfolios and advise them on coverage within their cost capabilities and risk retention strategies.
There is healthy top-line growth in the Asian insurance markets (not including mature markets such as Australia and Japan).
Overall premium in the region is forecast to increase by more than 9.5 per cent in 2017, according to Munich Re’s Insurance Market Outlook 2016/2017 report.
Against this background of development in the region’s primary markets, a big focus for JLT Re is training for both our own resource and for our clients’.
Compared to matured markets, there is a limited talent pool in country. Young, growing insurance companies need their own (re)insurance professionals to help them manage and understand pricing, reserving, solvency adequacy, capital risk and natural catastrophe risk, for example.
It’s our intention to put together comprehensive training programmes for JLT Re clients that will help nurture local talent in local markets.
It’s at an early stage of planning but I hope we will soon be able to help markets develop sustained training programmes in individual companies that will benefit the future generations of resource at our clients.
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For further information, please contact Stuart Beatty on +61 (0)292 908 106 or firstname.lastname@example.org