Almost all senior insurance executives polled in a recent survey would welcome a common regulatory framework across ASEAN. 86% of those interviewed expressed this sentiment for insurance integration in the ASEAN Economic Community (AEC).
In a corollary, 94% of the executives interviewed consider regulatory differences, in terms of minimum capital requirements, solvency regimes and reinsurance regulations as well as insurance and tax laws, a major obstacle to insurance integration in the region.
These findings are contained in the ASEAN Insurance Pulse published earlier this week by the research firm Dr Schanz, Alms & Company and Malaysian Reinsurance Berhad (Malaysian Re). Based on in-depth interviews with 35 senior executives from regional and international insurance companies, intermediaries and trade organisations operating in the region, the survey provides an authoritative overview of the current state and future prospects of the ASEAN region’s US$23 billion non-life insurance markets. In addition, it takes executives’ pulse on the AEC and its implications for the region’s insurance markets.
The executives polled do not fear the ramifications of the AEC integration. 74% do not consider AEC a threat to their respective insurance businesses over the next five years, although 95% expect that the liberalisation measures envisaged will further add to the degree of competition in the region’s insurance markets. This sanguine view, however, is predicated on the establishment of an effective framework of regulatory oversight to counterbalance increasing competition.
Formally launched on 31 December 2015, the AEC aims to create a single market by 2025 to facilitate the free movement of goods and services, including insurance, among the 10 ASEAN countries.
The ASEAN Insurance Pulse shows clearly that the AEC integration is viewed positively by the ASEAN insurance community. The executives polled expect a major boost to their markets through enhanced competition, innovation and governance,” said Dr Kai-Uwe Schanz, Chairman and Partner of Dr. Schanz, Alms & Company and author of the study.
“Almost half of the executives we interviewed believe that AEC will be a positive development for their respective companies in the next five years. Another 40% agree in principle, but caution that a five-year time frame might be too short for such benefits to materialise. Nearly two-thirds of the participating executives anticipate AEC to profit their domestic insurance markets at large, as innovation as well as customer awareness and satisfaction are set to improve.”