Chris Wei to helm IIS as next chairman

Aviva’s executive chairman for Asia Chris Wei has been appointed to lead the International Insurance Society (IIS) as its next Chairman, taking over from Mr Greig Woodring who is stepping down this fall having served in the role for the last four years.

“Greg leaves big shoes to fill as he has so skilfully and graciously managed the governance of the IIS and advised and counselled me over the years,” said IIS President & CEO Mike Morrissey, adding that IIS is fortunate to have secured an able successor in Mr Wei who is also global chairman for Aviva Digital.

The IIS management team will continue to be led by Mr Morrissey as CEO and Ms Colleen KcKenna Tucker as executive director.

Meanwhile, the IIS also announced the opening of two regional offices in 4Q2018 – one in Singapore to expand the organisation’s presence in the Asia Pacific region, and the other in London to focus on the EMEA region and support the society’s role as secretariat of the Insurance Development Forum.

Another new development is the partnership between IIS and The Institutes. The IIS became an affiliate of The Institutes, the leading education and research provider for the risk management and property-casualty insurance industry, in March this year due to a “harmony of values and aspirations”, said Mr Morrissey in his opening address.

“I noticed right away that their vision is to be the key knowledge partner that best empowers risk management and insurance professionals,” said Mr Morrissey. The partnership will create a more robust platform for networking and connection among IIS members and will broaden the reach of The Institute’s professional development programmes.

IIS will continue to deliver the Global Insurance Forum each year and will offer regional forums with more focused meetings in other locations around the world. The society has also identified an opportunity to focus on informing international risk management and insurance organisations about technological innovations and disruptive trends facing the industry. “We will be the same IIS, only stronger, the same unique franchise with an improved foundation,” said Mr Morrissey.


Industry plays a critical role in supporting resilience and sustainability

The insurance sector plays a critical role in supporting resilient societies and sustainable growth using both the liability and asset sides of its balance sheet, said Mr Joaquim Levy, managing director and CFO of World Bank Group, during a special address on the role of insurance in building resilience.

The World Bank is committed to helping emerging market and developing countries (EMDEs) which are most affected by the impact of natural disasters and climate change. Rating agencies have the tendency to not look at risks beyond four or five years, even for bonds of medium or long-term maturities, said Mr Levy. “This is a risk whose adverse impact remains under-priced. However, as insurers develop products against climate-related losses and strategically invest their reserves, they will be sending price signals that will affect investor behaviour,” said Mr Levy.

It is estimated that more than 90% of people facing extreme poverty today are in countries that are politically fragile or vulnerable to natural disasters or, in many cases, both. Their economic impact can derail reforms and impose large costs on societies, especially on the poor and most vulnerable. 

“We don’t have to think about risks in 30 years,” said Mr Levy, “since natural disasters can create a downward spiral of economic degradation right now, especially in fragile economies. As a development institution, we believe that viable risk-sharing mechanisms have a unique role in protecting poor and vulnerable people.”

The World Bank, through its Disaster Financing and Insurance Program (DRFIP), has developed a diverse array of financial protection instruments. In February this year, the organisation issued a $1.4bn CAT bond – the largest ever – covering earthquake risk in Chile, Colombia, Mexico and Peru. It is also working with the industry to create an infrastructure to support the offer of risk transfer mechanisms across the developing world, with a view to protect at least 400m people against natural disasters. This is at the heart of the Insurance Development Forum, a public private partnership involving the World Bank, the United Nations and the insurance industry.

The World Bank aims to make progress in areas such as the development of models for natural disasters for the present and the future, and the development of a climate-friendly infrastructure that could increase the resilience of economies, among others, to achieve its goal of eliminating extreme poverty and raising shared prosperity.


Climate risk insurance - PPP the strategy for the future, says German Federal Ministry state secretary Martin Jaeger

Climate risk insurance plays an important role in protecting populations, and public-private partnership is the way forward in this strategy, said German Federal Ministry for Economic Cooperation and Development state secretary Martin Jaeger, with a focus on the climate risk issue in his special address yesterday morning at the GIF in Berlin.

Mr Jaeger provided the host government’s perspective of the climate risk issue. Together with the G7 and partner countries, Germany aims to help insure 400 million more poor people against the risks of climate change by 2020.

Citing Chancellor Angela Merkel’s comments that climate risk insurance turns people from supplicants to claim holders, and noting insurance’s role in swift emergency relief and recovery, he said, “from a development policy point of view, this is a responsible approach”. He also lauded insurance industry members which have divested from fossil fuels and acknowledged the role of the industry’s risk assessment data in helping governments in targeted development measures for climate change adaptation and disaster preparedness.

However, Mr Jaeger noted that there are challenges. Often there are no solutions tailored to the needs of poor and vulnerable people and necessary legislation is not in place to facilitate these.

“We aim to change that, working with you in the insurance industry. Many of you are already on board…we want to encourage even more of you to join. You have the expertise to develop insurance products that match client needs,” he said. “Not unimportantly, you have capital. And climate risk insurance is an attractive alternative to the traditional capital market product.”

Mr Jaeger noted that climate risk insurance is however, not a panacea. Insurance solutions have to be embedded in broader financial risk management strategies and a comprehensive system of disaster risk management.
And partnerships between public and private sectors have a key role to play, such as providing solutions tailored to the needs of the poor and vulnerable and helping developing countries to collect data, analyse risks and foster smart investments in financing and insurance. In Asia, the German government is already engaged in successful cooperation with the insurance industry to generate harvest yield data and facilitate swift reimbursement if an insured event occurs.

“Public-private cooperation is the strategy for the future,” said Mr Jaeger, highlighting the “triple-win” solution that partnerships like InsuResilience provides.

Launched at the 2017 UN Climate Conference in Bonn and now counting more than 40 members encompassing governments, civil society, international organisations, academia and the industry, the InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions aims to strengthen the resilience of developing countries and protect the lives and livelihoods of poor and vulnerable people against the impacts of disasters.

“The insurance industry is looking for new markets and new products. Official development players are looking for new investors. People in our partner countries want to insure themselves against climate risks. This is where our interests coincide and we should seize this opportunity,” said Mr Jaeger.


Insurance industry in a changing world

GDV (German Insurance Association)’s Competence Centre Corporate Management and Regulation member of the management board Klaus Wiener talked about some of the challenges of the insurance industry in a changing world, from a European perspective.


Insurance still has its work cut out in proving its value to customers

The insurance industry needs to do a lot more to gain trust as a force for good, said Willis Re International chairman James Vickers.

Mr Vickers was speaking at a panel discussion sharing wide ranging global perspectives on the challenges facing the insurance industry. He said that the industry still has to work a lot harder at explaining what it does. Being by nature not a transaction that is in an ‘instant gratification’ format, with pricing based on its own sophisticated models and data that is not evident to the public, the lack of understanding of the industry is further undermined by its inconsistent service level to customers, the price-based selling without adequate explanation of policy exclusions, and the “huge element of mis-selling going on”.

“The reality is there is bound to be some disappointment,” he said. “We have to work a lot harder explaining what our role is.”

Providing the perspective of an Asian emerging market with huge potential, India First Insurance Co CEO and managing director R.M. Vishakha said India’s insurance industry is moving from a ‘buyer beware’ to a ‘seller aware’ model, with a lot of onus placed on insurance companies to responsibly market to a diverse population where some segments have very low financial awareness.

The industry, however, in seeking to prove its worth, faces a number of challenges. These include creating value and staying profitable in the face of mounting costs and a changing risk environment. One significant rise in expenditure comes from increasing regulations.

Increasing regulations

Hannover Re board of management member Michael Pickel acknowledged that compliance costs could be “burdensome”, with the new IFRS 17 reporting standard bound to cost more than Solvency II and could affect pricing. “What increases costs year after year is costs of approval for manpower and IT systems associated with regulations,” said Mr Pickel.

However, he was sanguine about the benefits new regulations can have, and noted that the processes put in place as a result of Solvency II have helped to streamline risk management and pricing. Over time, these processes could be simplified, he said.

Mr Vickers said that while he sympathised with regulators in charge of an industry where people pay upfront for a service they may or may not receive, the question is to find where the balance and degree of intervention lies. What he is more concerned about though, is the deglobalisation of regulation, where individual countries stifle new competition and only some players can bear the cost of operating in them. After all this undermines an insurance key principle—the diversification of risk.


“Within the industry that is a very difficult subject for us to push back against because we look entirely self-serving when we start complaining about that,” he said. “We need to engage others to help us, in particular the academic community which can talk about the costs of such behaviour.”

Mr Pickel said that diversification has helped in difficult claims situations like the disasters of 2017. However, the protectionist tendencies in certain markets like Latin America, Asia and the Russian Federation are working against reinsurers, making it hard to get business out of these countries.

Building the local industry – not too self-serving

The panellists noted the difficulty in international insurers arguing that they could build the local market as a whole, given how self-serving it seemed while they were also to profit from it. Mr Vickers said that the best way would be to look at relevant success stories which speak for themselves.

For example, in the 2011 Christchurch earthquake in New Zealand, where insurance penetration is relatively high, losses amounted to about 20% of the country’s GDP but were largely recovered by foreign insurers and their global reinsurance. This was a contrast with, sadly, some local insurers which were overwhelmed by the disaster. This is a powerful story for the value of insurance, as is the similar total dependence of the smaller Caribbean markets on foreign players he said.

Ms Vishakha, expressing a view not just of India but probably the BRICs economies, said regulations were evolving towards welcoming players which were willing to come in and provide capital. She acknowledged that there were many benefits that the foreign players could bring, as long as they looked at how to meet the very different needs of the diverse local insurers—for example, reinsurance companies have not come up with capital support or support towards financial reinsurance in India.


The panel addressed what Mr Vickers called one of the elephants in the room when it comes to proving the role of insurance—which was that for every dollar of premium, the industry only pays about $0.60 in claims. This is not tenable in the long run. “We have to get to paying at least 75 or 80 cents to a dollar in claims. We have to aggressively look at our own cost base and running them lean,” he said.

He noted that the biggest costs are in distribution and this has to be squeezed. However, despite the progress towards innovation taking place, insurance is at its heart an emotional purchase based on personal risk tolerance and in his view, cannot be done “entirely on an online app”. Ms Vishakha noted that often in India, claims ratios were in excess of 100% and a lot of underwriting was still based on outdated tables. This just reflects that many insurers have not caught up with the risks, despite availability of data and the possibilities of reducing distribution.

The discussion extended to topics like alternative capital, innovating with dynamic underwriting and pricing to streamline insurance, the interest rates environment, and the rise of non-traditional players and FinTech. The panel was moderated by IIS chairman Greig Woodring.


Shaping the future of insurance through strategic collaborations

As we address the future of insurance during this GIF, here’s a perspective from Aviva Digital global chairman and Aviva Asia executive chairman (also incoming IIS Executive Council chairman) Chris Wei on where Asia stands amid the changes. A well-known digital trailblazer, Mr Wei was recognised as Personality of the Year at the 21st Asia Insurance Industry Awards last November.

Asia’s insurance industry is in a state of change.

And whilst more developed insurance markets, such as the UK and Australia, may have had a head-start in becoming increasingly customer-centric, digitalised and innovative, Asia is now playing catch-up at an exponential pace.

Take China as a powerful case in point: online sales of insurance products leapt from zero to 9% of the total market in the space of two years, and its InsurTech market has been predicted to garner more than CNY1.1tn ($174bn) in total premiums by 2020.

What this means for the industry is that we need to rethink our game plan. The traditional business model of pushing or selling insurance to customers in a ‘one-size-fits-all’ approach will no longer suffice – instead, it is about providing customers with tailored propositions when and where they need insurance, with a simplicity and speed that adds real value to their lives.

As insurers, we need to embrace new ways of engaging with customers, identifying the right opportunities, and demonstrating the value we can deliver. Insurers need to revamp the customer touchpoints, experiences and propositions offered to stay relevant.

Aviva has invested significantly in being future-ready through initiatives such as organic innovation, improving our business agility and digital capabilities, and hiring a diversity of talent. But there remains room for us to spearhead innovation at greater pace and scale by exploring synergies with other organisations, whether from within or outside the insurance industry, and leveraging the range of expertise we bring to the table.

Collaborating with companies and people that have achieved success through digital disruption can propel us forward with increased speed and efficiency – which is crucial for us to thrive in this evolving market. As a result, we are seeing more cross-industry partnerships with market leaders in sectors beyond financial services, including the likes of Tesla, Amazon and Tencent, which bring with them massive ecosystems and expertise that would otherwise have taken insurers years to build.

In addition, they have also amassed a wealth of consumer understanding and experience in driving innovation, which are essential when navigating the unchartered waters of digital transformation.

This underlies the rationale for Aviva’s Hong Kong joint venture with China tech giant Tencent and financial heavyweight Hillhouse – by leveraging the know-how of three companies from different fields, we aspire to create new digital insurance propositions for customers and disrupt a fairly traditional market.

It is also key for us to embrace early-stage disruptors, who bring fresh perspectives and solutions to real insurance problems, yet often lack the resources to bring them to fruition. As established insurers, we are well-placed to bridge that gap, whether that is by investing in these companies or helping to foster a more inclusive innovation ecosystem where they can thrive and flourish. Aviva is a strong advocate of this – apart from investing in high-potential start-ups through Aviva Ventures, our venture capital arm, we are also committed to working alongside governments, regulators and fellow corporates to enhance ecosystem dynamics.

Ultimately, the days are gone when disruptors and non-traditional players are viewed as competition. Collaboration is a win-win situation for all stakeholders, especially consumers, and has a key role to play in shaping the future of insurance. By nature, innovation must be open to take flight – and this is the approach that the industry must adopt to progress quickly.

Asia remains a sweet spot for growth given positive macro factors such as a rising middle class, big populations and low insurance penetration. Whilst traditional distribution channels such as agency forces and bancassurance still play a dominant role in the region, technological innovation is fast transforming the way insurers reach, educate and interact with customers. To be successful, insurers of the future need to pre-empt and address potential gaps in the market, and be flexible and open-minded enough to provide solutions, both from within the organisation or through collaborations.

Get that right, and insurers and customers will enjoy an ever-closer relationship in the future. Get it wrong, and others will be only too happy to prosper while we stay stuck in the past. 


IIS recognises nine universities as Global Centres of Insurance Excellence

The IIS has designated nine universities worldwide as Global Centres of Insurance Excellence (GCIE) in 2018, after a rigorous review by the IIS GCIE Evaluation Committee. IIS president and CEO Mike Morrissey honoured the universities yesterday at a recognition ceremony at GIF in Berlin.

They are:

  • Drake University (USA)
  • Georgia State University (USA)
  • Illinois State University (USA)
  • Lingnan University (Hong Kong)
  • Sungkyunkwan University (South Korea)
  • University of Alabama (USA)
  • University of Barcelona (Spain)
  • University of Lausanne (Switzerland)
  • University of North Texas (USA)

“The GCIE award is the first received by a Hong Kong university. I think it is an important achievement as it shows the development in the Hong Kong insurance education, following the funding that we received to develop insurance education five years ago. We now have a stronger faculty and a better programme to train students,” said Dr Yick Ho-yin, Assistant Professor of Teaching, Department of Finance & Insurance, Lingnan University, one of the 2018 GCIEs.

The GCIE certification programme, announced in January 2017, recognises outstanding risk management and insurance programmes that play an integral role in promoting insurance knowledge and research. It is awarded to universities and colleges that meet stringent criteria focused on student qualifications, course offerings, graduate and industry employment rates, as well as professional involvement. The universities must also demonstrate that students are learning primarily from a designated full-time faculty with appropriate academic qualifications and research expertise.

The call for applications for the 2019 GCIE designation will be released in Autumn 2018.


Marketing insurance in the digital age

Disruptions may come and disruptions may go but someone still has to market insurance products and promote the brand. Welcome to the untamed digital frontier of the future.
Many of yesterday’s media assets have disappeared altogether or migrated to a digital environment while the greatest disruption to the media sector involves the influx of vast numbers of new media channels. These range from social media, to niche media to re-styled old media.

Handheld devices change the landscape

How have the leading marketers of insurance products in Asia responded to changing media consumption habits, a changing media landscape and digital disruption?

Zurich Insurance (Hong Kong) chief marketing officer Fiona Kwok acknowledges the vastly changed consumer landscape. “Hong Kong is one of the most mobile-friendly markets in the world with mobile penetration at 247%, which means that most people have more than two mobile phone subscriptions on average. Smartphone penetration is above 90% of the adult population… Technology has created multiple gateways for insurers to differentiate themselves in this environment,” she said.

AIA group chief marketing officer Stuart Spencer sums the situation adeptly. “The industry has gone from a model of being predominantly disengaged with customers to one where we drive customer behavioural change,” he said.

But digital marketing has implications far beyond B2C communications as Allianz Global Corporate & Specialty’s (AGCS) regional head of marketing and communications Asia Pacific Wendy Koh acknowledges. “ACGS, as a purely B2B corporate insurance carrier, was not at the forefront of digital migration but we saw our corporate clients investing more in social media and that made us realise that this was a new channel that would help us engage with them,” she said.

Enter social media

There is no escaping the pervasive influence of social media in the modern marketing mix of the region’s leading insurance companies. AGCS Asia Pacific marketing and communications officer Shakun Raj said, “We use LinkedIn, Twitter and Google+ for ACGS for our corporate community. Facebook and Instagram, for example, are used by Allianz Group as a whole as both channels are great for businesses that are retail-focused.”

AIA is also a veteran when it comes to using social media for marketing. “In general we have to be very selective about what social media we find makes the most sense,” Mr Spencer said. AIA also weaves in other elements of its marketing mix into is social media presence, such as leveraging its brand ambassadors. “We got 41m views of David Beckham’s 30-, 60- and 90-second spots in social media with an estimated reach of about 129m people over that period,” he said.

Zurich’s Ms Kwok echoes this sentiment. “Social media can be more personal than traditional media and is focused on relationship building and engagement,” she said. “For example in Zurich there is no significant data to support sales conversion. Instead of focusing on sales we use social media to tell Zurich’s story.” Zurich is an advocate of both Facebook and LinkedIn. “They are good platforms for us,” said Ms Kwok.

The next 12 months promise to be very dynamic for the region’s sharpest marketers and the challenge might be about how to reinforce the brand if the much-predicted disruptors appear on the scene. The smartest marketing strategies will prove to be essential.


Transforming an Asian insurer into a truly global force

Last night, the International Insurance Society formally inducted Tokio Marine Holdings board chairman Shuzo Sumi into the 2018 Insurance Hall of Fame at a gala awards dinner at the Global Insurance Forum in Berlin.

Mr Sumi joined Tokio Marine in 1970 and became general manager of the commercial lines underwriting department in 1998. He subsequently led the transformation of Tokio Marine into a truly major global insurance group, through a series of acquisitions. He also helped to modernise Japan’s earthquake insurance regime, and has led research in the fields of climate change and natural catastrophe risks in his capacities as vice chairman of the Geneva Association and as co-chair of the Extreme Events and Climate Risk Working Group.

The Insurance Hall of Fame, one of the highest accolades in insurance, recognises leaders who have made a broad, encompassing and lasting contribution to the insurance industry and who are recognised by their peers as successful leaders, innovators and visionaries.

Insurance Hall of Fame
Shuzo Sumi,Chairman, Tokio Marine Holdings

The other award recipients of the night were:

John S. Bickley Founder’s Award
Andrew Kuper, Founder and CEO, LeapFrog Investments, Australia

Shin Research Excellence Awards

  • Alexander Bohnert, Chair Of Insurance Economics And Risk Management, School Of Business And Economics, Friedrich-Alexander University Erlangen-Nürnberg (FAU)
  • Albrecht Fritzsche, Chair Of Innovation And Value Creation, School Of Business And Economics, Friedrich-Alexander University Erlangen-Nürnberg (FAU)
  • Shirley Gregor (not present), Information Systems, Research School Of Management, Australian National University (ANU)

Leaders of Tomorrow Award

  • Andrea Stein, Vice President, Marketing Communications, AIG Private Client Group
  • Peter Banthorpe, Senior Vice President, Head of Global Research & Development, RGA
  • Mital Patel, Business Development Director for UK Actuarial Outsourcing, Willis Towers Watson
  • Timothy Galloway, Regional Head of Liability, Allianz Global Corporate & Specialty
  • Patrick Schmid, Vice President of RiskBlock Alliance, The Institutes
  • Ditte Deschars, Member of EMEA N/E Management Team, Willis Re


The Awards Gala cocktail reception and dinner


Meet The Team

General Manager Business Development: Sheela Suppiah-Raj
Editorial team: Chia Wan Fen, Zuhara Yusoff
Design & Layout: Angeline Tsen, Jerick Yu