In this concluding segment in a series of three parts, Mr Takeo Inokuchi, Senior Adviser of Mitsui Sumitomo Insurance and Industry Keynote Speaker at the 8th Conference on Catastrophe Insurance in Asia, shares his concept of how the pilot project of the fund, tentatively named Asian Catastrophe Fund (ACF), can work. He stresses that this is purely his personal idea and in particular, the payment limits and structure mentioned therein are only provisional.
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In a move to safeguard financial institutions during this financial downturn, The ACE elite Financial Institutions Civil Liability Insurance policy was created to provide protection to all types of financial institutions for the professional services they offer to clients or customers around the world. In an exclusive interview with Mr Nicholas Small, International Financial Institutions Product Manager and Ms Demetra Day, Financial Institutions Underwriting Manager-Asia Pacific from ACE Insurance, we find out how this policy can aid the financial industry.
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Oracle has established itself in the insurance business. With the launch of Oracle Insurance, it has made core insurance solutions a key business of the company, and now the unit is on its way to mark its footprint in such markets as Asia. Mr Chuck Johnston, Vice President, Oracle Insurance, talks to us about this new unit and its plan to be everywhere Oracle is.
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Takaful no doubt brings a promise of growth to operators and of risk protection to consumers, particularly in markets that have objected to conventional insurance. Yet problems as fundamental as varying interpretations of the Islamic law and the lack of consumer awareness persist. Mr Daniel Staib, Vice President, Senior Economist, Economic Research & Consulting, Swiss Re, discusses the roadblocks to takaful’s progress, as well as the growth it has made and is set to make.
By Ms Manuelita Contreras
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A span of 38 years may seem like a long time for most people, but for Mr Hiroshi Fukushima, the new President of The Toa Reinsurance Co Ltd (Toa Re), the years had zipped by as he encountered and worked through difficult times at the company, rising through the ranks and helping steer it forward successfully. As he embarks on his new role, Mr Fukushima sets more plans for the company to ensure its continuous progress and achievement.
By Ms Manuelita Contreras
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In 2008, natural catastrophes and man-made disasters caused 240,500 fatalities and led to economic losses of US$269 billion (amount adjusted to inflation and is reported at 2008 prices), according to a sigma report on “Natural catastrophes and man-made disasters in 2008”. The cost to property insurers was US$52.5 billion, making 2008 one of the costliest catastrophe years in history.
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Catastrophes are a major issue for Asia in terms of both lives and property. Demographic trends and economic growth will drive losses higher in coming decades. As more total exposure becomes insured, the insurance system will play a growing role in funding them. Mr Sifang Zhang CPA CFA, Head of Rating Agency Advisory Service – Asia Pacific, Aon Benfield, examines this to see if this will lead to profits or problems for Asian insurers and also recommends that an insurer build a catastrophe management strategy using the rating agencies’ criteria.
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As China prepared to host the 2008 Olympic Games, the attention of the nation was diverted by events of catastrophic proportions, including a series of winter storms and the magnitude 7.9 Wenchuan Earthquake of May 12th. Ms Helen Ye, AIR Worldwide’s Manager for the Asia region and Dr Tao Han, Deputy Manager of AIR Worldwide’s Beijing office, review the major natural disasters from the past year and discuss their impact on China and, in particular, on China’s growing insurance industry. One thing became clear in the aftermath – the industry will need to implement better risk management practices.
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Hundreds of thousands of people in the developing world suffer every time a catastrophe occurs. Most victims are at the “bottom of the pyramid”, losing their means of livelihood and homes, pushing them further down the spiral into poverty. The lack of sufficient and immediate financial resources for recovery efforts from such disasters creates an enormous challenge, further fuelling poverty and illegal migration in the developing world.
Mr Zifa Wang, Managing Director, RMS China and Mr Pane Stojanovski, Vice President, Model Development Operations, both from Risk Management Solutions (RMS), say that the solution is to make available low-cost microinsurance to citizens of developing countries, that are intended to preserve their means of livelihood, residence and personal items.
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The current economic crisis is not putting a damper on this emerging market’s insurance industry. Ms Manuelita Contreras and Ms Shakun Ashoka Raj meet with players in the market and find that the regulator, non-life and life insurers as well as local and foreign reinsurers are optimistic about the prospect of this vast country.
Most of the optimism comes from the life insurance sector as with a total population of 86 million and only about 7% are insured, the potential is enormous. In the non-life sector, there is a distinct slowing down of the economy and keen competition is increasingly making it a bit more difficult to grow profitably. However, insurers here too, believe that business will be back to its high double-digit growth once the global economy recovers.
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These are trying times for Vietnam’s non-life sector. After years of growth, reaching a high of 32% last year, it faces a crisis that has already made its effects palpable in many markets. How will this economic downturn change the landscape of this young market? Will the sector be able to keep its growth? We ask some key players in the market.
By Ms Manuelita Contreras
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Since its accession to the World Trade Organization in 2007, the economy of Vietnam has been more vibrant and it has become one of the more attractive destinations for investment. All these bring about improving circumstances for the population and increased interest in insurance by the people. With 11 life insurers (1 local and 10 foreign) catering to the protection needs of 86 million people, there is definitely abundant potential in the country. Even with the current slowdown of the global economic growth, life insurers in the country are still thriving, with some expecting double-digit growth numbers, no less.
By Ms Shakun Ashoka Raj
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Mr Trinh Quang Tuyen, Chairman & CEO, Vietnam National Reinsurance Corp (Vinare), is optimistic about the Vietnamese insurance market despite the current slowdown. In this exclusive interview, he talks about the market’s prospects and the setbacks that are hampering its progress.
By Ms Manuelita Contreras
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Vietnam, with a population of 86 million, illustrates the enormous potential for the life market. Currently only about 6 million of the population have any form of life cover and most of these are in the cities with market premiums amounting to only 2% of GDP. Dr Malini Tharmanason, Medical Consultant, South & South East Asia, Life Division, Hannover Re Malaysian Branch, gives a quick overview of the Vietnam life market, highlighting the current difficulties temporarily clouding the bright prospects, as well as says that the Association of Vietnamese Insurers (AVI) can do much to help develop the industry.
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When we reviewed the Chinese market last year, saying that it was “Racing Away with Growth”, no one could have predicted the following events which have somewhat dampened moods in the burgeoning economy. However, China is still travelling in high-gear particularly with the CIRC on its mission to regulate the market and providing more opportunities to insurance players to cultivate not only business but also best practices in the industry.
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Alternative Dispute Resolution (ADR) usually refers to any means of settling disputes outside of the courtroom. Typical ADR includes any one of or all the processes of negotiation, mediation and arbitration. Ms Helen Shen, Legal Executive, Deacons Shanghai Office, explains these three processes in China and what the advantages and disadvantages of each are.
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With the theme “Distribution as the driver to maximising returns in the crisis,” the 10th Asian Conference on Bancassurance & Alternative Distribution Channels organised by Asia Insurance Review discussed how bancassurance and other alternative distribution channels can thrive in the current financial crisis. The conference provided an avenue for an engaging discussion mainly on how insurance players, as well as other parties such as banks, can best tap the growing profitability of alternative channels.
By Ms Shakun Ashoka Raj
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Microinsurance schemes are gaining ground around the world today, but they still only meet a small fraction of the overall need. Some microinsurance schemes are self-sustaining, with most receiving vital support in the form of grants and technical assistance. Nonetheless, initiatives like The Microinsurance Innovation Facility are helping to sustain new research and projects to further the development of microinsurance. Here, we take a look at how this facility aids the poverty-stricken areas as well as other schemes that have been implemented around the region that has provided a boost to the microinsurance business.
By Ms Shakun Ashoka Raj
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Low-income households are vulnerable to risks and economic shocks. Mr Ayandev Saha, Manager – Project (Microinsurance), and Ms Nidhi Desai, Manager – Health Claims, from ICICI Prudential Life Insurance Co Ltd, Mumbai, India, highlight that to protect these households, microinsurance is a suitable answer. However, to reach the rural crowd, conveying the right message and in the right way is crucial – communications need to be complete, clear, correct, concise, candid, concrete and courteous.
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It was a business that struck a chord with working- and middle-class Filipinos. They entrusted billions of pesos into it thinking they found a sure and simple way of saving, especially for their children’s education. But now the pre-need sector is marred by controversies and problems that have seen those savings disappear. We look at the rise and fall of the Philippine pre-need sector.
By Ms Manuelita Contreras
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The financial crisis has prompted insurance companies to call for more capital.
Mr Christian Wertli, Director, Swiss Re’s Structured (Re)Insurance Solutions Asia highlights the unique advantages of reinsurance — either traditional or tailor-made — for improving solvency.
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In this article, extracted from a Special Contribution to the Geneva Association Newsletter on Risk Management, Mr Andrew Dlugolecki, Principal, Andlug Consulting, says that because climate change creates the possibility of widespread social and economic stresses which would undermine insurability, insurers will need to overhaul their procedures for risk assessment, underwriting, claims-handling and reinsurance, and reconsider their product design.
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As worldwide energy demand climbs, there is an increasing need to help ensure greater safety of new power generation facilities. Mr Peter Madeley, Vice President, Asia Operations of FM Global, talks about this increased demand spurred especially by industrialisation in emerging markets and how FM Global is working diligently on several fronts to help protect this new generation capacity from risk of loss.
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It is a challenge for managers to create an environment where staff and colleagues are inspired to learn and to continue to learn for its own sake, and not just for increased pay, promotion or recognition. Ms Joan Fitzpatrick, CEO of ANZIIF, reveals its plan to launch a new online strategy to foster its community of learners to engage and inspire each other and learn more about their work with enthusiasm.
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Mr Yassir Albaharna of Arig and Mr George Kabban of UIB are also scheduled to speak at the
biennial event.
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The insurance industry in Sri Lanka scored a first with the hosting of the first international conference in the country after the 30-year war with terrorism to establish the territorial integrity of the country finally ended last month.
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American International Assurance Company (AIA Group) has initiated a rebranding effort that will see “a bold, new brand visual identity progressively rolled out across the region, with everything from businesses to buildings changing their names,” said the company.
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Sixty per cent of Indians are confident about their families’ financial situation in the event of critical illness, accidents or unexpected life loss, the latest survey by HSBC Insurance has found. The percentage was the highest scored in the survey which covered six countries and territories.
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The insurance industry has to develop concerted national efforts to combat the significant increase in claims arising from soft fraud, urged panelists during a fraud management seminar in Singapore last month.
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The Australian Taxation Office (ATO) has warned businesses against entering into arrangements that attempt to claim inflated insurance expenses for tax deduction purposes, said a news report.
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A little more than one-third of Chinese bank customers (37%) know that they can obtain insurance over bank counters, according to the findings of a recent study by Allianz China Life on the buying patterns of Chinese banking customers.
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HSBC Insurance (Asia) Ltd has received final approval from the CIRC to launch a jointly held insurance company with Beijing-based National Trust Ltd.
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Mitsui Sumitomo Insurance (China) Co Ltd (MSI China), a wholly-owned subsidiary of Mitsui Sumitomo Insurance, has received approval from CIRC to set up a branch in Beijing.
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Hong Kong’s life insurance sector saw its new office premiums for long-term insurance fall 60.5% to HK$8.5 billion (US$1.09 billion) for the first quarter of this year.
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China Insurance International Holdings Co Ltd (CIIH), a Hong Kong-listed insurance conglomerate, is proposing to acquire an aggregate of 1.39 billion shares of Ming An (Holdings) Co Ltd, or 47.8% of Ming An’s issued shares, with a view of reaching economies of scale and enhancing its market competitiveness, according to media reports.
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India’s insurance industry watchdog, the IRDA will make it mandatory during the current financial year, which ends next 31 March, for insurers to adopt a uniform and standard valuation methodology based on the companies’ embedded value.
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India’s insurance industry is likely to post unprecedented growth of more than 200% by 2010-2011, said the Associated Chambers of Commerce and Industry of India (Assocham) in press reports. Private insurers would grow at 140% given the aggressive marketing approaches that they use, while state-owned insurance companies would likely grow at 35-40%.
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Religare Enterprises Ltd and Swiss Reinsurance Co have signed a non-binding agreement to set up a joint venture health insurance company in India. The venture is expected to be operational by 2010.
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Indonesia’s oil and gas insurance coverage consortium is not expected to be able to block premium hikes when negotiating with the international insurance market despite the low domestic loss ratio, said media reports.
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Bank Negara Malaysia has taken over the control of Tahan Insurance after the insurer failed to comply with capital requirements and to fulfil the capital restoration plans.
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Pakistan’s sole reinsurer, Pakistan Reinsurance Co Ltd (PRCL), posted a net premium of PKR1,896 million (US$23.4 million) in 2008, up from PKR1,693 million the previous year and registering an increase of PKR203 million.
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The Philippine House of Representatives has approved the bill scrapping documentary stamp and premium taxes on life insurance.
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Aviva has unveiled the Aviva Futurator to help Singaporeans visualise and project their future. The Futurator, which is a combination of futuristic interactive technologies, is part of the company’s effort to get Singaporeans to start thinking of their future and take the first step in financial planning.
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Fubon Life Assurance has formally merged with ING Antai Life Insurance, with the new entity projecting NT$170 billion (US$5.3 billion) in revenue from first-year premiums this year.
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The Financial Supervisory Commission (FSC) is mulling over revising the regulations for the management of agents and brokers so that banks would be liable for selling insurance directly, said FSC Chairman Sean Chen during a recent bancassurance seminar.
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French insurer Cardif has set up an insurance joint venture in Vietnam with Vietcombank and SeAbank. VCLI, the new venture, will sell savings and protection policies through bancassurance and will initially offer creditor insurance and individual protection products.
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While reinsurers and insurers are used to dealing with natural catastrophe losses, investment losses in the slumping economy have created a disaster of a different kind for them, according Standard & Poor’s Co (S&P).
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Manchester United announced that from the start of the 2010/2011 season, Aon Co will feature on their famous shirts, as part of the global sponsorship agreement.
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AXA insurance has confirmed it is the lead insurer for the Air France Flight 447, which vanished on 1 June, during a storm with 228 people on board. The Airbus A330 went missing on a flight from Rio de Janeiro to Paris.
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New York State Insurance Superintendent Eric Dinallo will resign effective 3 July 2009, amid speculation the former prosecutor may run for state attorney general.
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Amlin Plc, the biggest insurer in the Lloyds of London market, will buy Fortis Co Insurance NV for €350 million (US$500 million) in its largest acquisition to expand in Europe.
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The current financial crisis is unearthing an increasing number of corporate frauds of all sizes. Mr David Smyth, Managing Partner Hong Kong and China and Mr Antony Sassi, Senior Solicitor, both from Barlow Lyde & Gilbert LLP, examine the various fraud cases that happened recently, the D&O insurance policies in Asia and their potential exposures in the future.
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Ratings movements on this page are made between 15th of May and 15th of June 2009. Companies and
rating agencies which want to be covered are kindly requested to send their inputs to Ms Min Yong at
minyong@asiainsurancereview.com
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