ASEAN insurance regulators will continue to work closely together to achieve a consistent approach in the development of a holistic insurance ecosystem in Southeast Asia - made more urgent given the demands of digitalisation and changing consumer expectations.
Bank Negara Malaysia’s assistant governor Adnan Zaylani Mohamad Zahid said this at the opening of the 3rd ASEAN Insurance Summit held in Kuala Lumpur yesterday – with the theme ‘The fourth industrial revolution and its impact on the ASEAN insurance industry’.
“We have seen the need to become more agile, pragmatic and experimental. We also need to be more open to new ways of formulating developmental policies and regulation. In this respect, we can learn from each other the evolving practices, environment and developments that we face in our respective markets,” said Mr Adnan.
He also highlighted new areas of collaboration between regulators and the industry, particularly in managing risks brought about by technology and innovation.
“These include consumer data protection issues, rise of cybercrime, potential job loss or disruption, and rapid and unexpected climate change and natural disasters,” he said.
Healthcare protection gap a concern
During yesterday’s event, results from the ASEAN Insurance Pulse 2018 annual market survey was also released, based on interviews with 41 insurance executives in the region. The survey, conducted by Dr. Schanz, Alms & Company and sponsored by Malaysian Re, revealed concerns on the insurance protection gap in Southeast Asia, with healthcare viewed as the largest and most relevant gap in the region.
Rampant medical inflation coupled with a rapidly ageing population is causing stress to public and individual finances, with out of pocket healthcare expenses of more than 50% recorded in Cambodia, Myanmar, Indonesia and the Philippines.
One of the reasons cited for the gaping insurance protection gap in the region is the low level of financial literacy. With the exception of Singapore, all the other ASEAN countries have large rural populations where the role and value of insurance is hardly understood.
The survey also showed rising expectations for M&A and market consolidation, fuelled by heightened competitive pressures, rising capital and solvency requirements, and a freeze on new licences in many jurisdictions.
ASEAN Economic Community
Speaking on the progress of the insurance sector in realising the goal of a single market in line with the vision of an ASEAN Economic Community, director of market integration, ASEAN Economic Community Department, Ho Quang Trung, said efforts to liberalise the Marine, Aviation and Transit Insurance (MAT) segment has borne fruit and lowered the cost of insuring cross-border risk.
He also pointed towards the development of a Southeast Asia Disaster Risk Insurance Facility (SEADRIF), a regional catastrophe risk pool to provide rapid response financing in the immediate aftermath of a natural disaster. The initial beneficiaries of the regional catastrophe pool will be Laos and Myanmar, with the initiative supported by Japan, Singapore and the World Bank.
“It is crucial for ASEAN to ensure that its integration process is inclusive, when regional integration benefits all members can it then be considered a success,” said Mr Ho.
The 3rd ASEAN Insurance Summit, held on the sidelines of the 44th ASEAN Insurance Council meeting and 21st ASEAN Insurance Regulators meeting, is organised by the ASEAN Insurance Council, Life Insurance Association of Malaysia (LIAM) and the General Insurance Association of Malaysia (PIAM).
A full coverage of the conference will be available in the upcoming January edition of Asia Insurance Review.