The ASEAN insurance sector is poised to play a bigger role in financing the region’s infrastructure needs through long-term investments, on the back of greater financial integration in the era of the ASEAN Economic Community (AEC).
At a recent media briefing in Singapore, Ms Evelina F Pietruschka, Secretary General of the ASEAN Insurance Council (AIC) said liberalisation efforts as part of the ASEAN single market will lead to better access to quality savings and retirement products in the region. And due to the long-term nature of their liabilities, insurance funds have the ability to invest for longer durations which suits the profile of infrastructure investments.
“In order to realise ASEAN connectivity as part of the AEC, there is a need to close the infrastructure gap in the region. And the insurance industry can play a big role in this,” she said.
Infrastructure spending in ASEAN to be more than US$2 tln by 2030
The infrastructure gap is global with the US through to Europe in need of investments. The ASEAN region is expected to require more than US$2 trillion in infrastructure spending by 2030, according to some estimates.
Nonetheless, there is much to be done to smoothen the flow of funds between the insurance sector and the capital markets.
This includes having a robust legal framework that will allow for greater certainty for institutional investors, said Dr Khoo Kah Siang, CEO of Great Eastern Life Singapore.
“Documentation is important so there is a need to standardise the legal framework, and it’s also important to harmonise the ratings as well to provide a clear benchmark for investors.”
In order to facilitate greater investment and economic integration in the ASEAN region, the recent establishment of the ASEAN Insurance Forum is a step in the right direction towards streamlining various processes, said Ms Pietruschka.
To sustain the important dialogue between both the private and public sectors, the AIC organised the 2nd ASEAN Insurance Summit in Yogyakarta on 23 November 2016.