A company can be profitable while endeavouring to remain socially responsible – MetLife Korea, led by its President & CEO, Mr Stuart Solomon, makes an apt example.
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With scarcer capital, insurers and reinsurers will have to change the way they do business. Mr Rupert Atkin, Chief Executive of Talbot Underwriting, shares what he foresees in 2009 and how the company will be taking in this challenging business landscape.
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Takaful is thriving in Malaysia, growing at about 21% for the last few years. However, it is still a small segment of the insurance industry and more efforts are needed to improve the penetration rate in the country. In this segment, we look at the takaful landscape in the country and also speak with takaful and retakaful companies for their views on how business is like today and if the current financial crisis has any impact on the takaful scene.
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Malaysia has been touted by sigma as the world’s most developed takaful market with advanced regulations that encourage takaful growth and has accounted for US$526 million in takaful contributions out of the total global pool of US$1.66 billion in 2007. We take a look at the takaful industry in Malaysia.
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With ambitious plans to expand its Indonesia operations by pumping in close to US$6 million in capital, Takaful Malaysia looks set to move strongly into 2009 and into its 25th year in the takaful industry. Datuk Hassan Kamil, Group Managing Director of Takaful Malaysia, talks about the Malaysian takaful market and future endeavours of the company.
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ACR ReTakaful SEA is the latest retakaful provider to launch its operations in Malaysia late last year. Mr Zainal Abidin M Noor, its CEO, talks about the company’s aspirations and focus and why they chose Malaysia to be their headquarters. He also looks at the financial crisis and gives his views on what the retakaful scene would look like in the near future.
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As a company that offers both conventional reinsurance and retakaful business, Labuan Re faces the challenge of balancing both kinds of businesses in an offshore jurisdiction offering solutions to global clients. Mr Majid Mohamad, President and CEO of Labuan Re, talks about the company’s experience and challenges.
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Microtakaful is the confluence of Islamic finance and microfinance. As such, it addresses two of the largest groups on earth – the underfinanced and the Muslim population. There is obviously an overlap here as some people will come under both groups. Mr David Piesse, Global Head of Insurance, Sun Microsystems, examines how microtakaful could become workable in the months to come when applied in the insurance industry through modern mutuality.
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The harsh financial climate has not spared Japan’s insurance industry, which saw one of its players go under last year amidst the global credit turmoil. Now the industry is invigorating itself to pull through the crisis and believes it would not to see another failed Yamato Life.
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With a financial crisis this gigantic, there are definitely lessons to be drawn. Mr Katsuo Matsushita, General Manager of the General Insurance Association of Japan, tells us what these lessons are as well as how we can move towards a sustainable insurance market.
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For the insurance industry, climate change has never been just a fad. It affects the bottom line in a big way, and so it is no surprise that the industry around the world is at the forefront of initiatives and solutions for this threat to our planet. It is also heartening to know that governments, insurance players and other private companies are now co-operating and co-ordinating their actions to tackle this peril. Asia Insurance Review finds out what some of these insurance companies are doing and also presents in-depth discussions from three companies which talk about renewable energy, an Arctic Circle expedition and why a climate agreement is urgently needed. There is also a spotlight on last year’s 15th Indonesian Rendezvous which had focused on climate change and what is needed for Indonesia to curb its flood problems.
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Emissions driving global warming were created by this generation’s parents and grandparents. Over the next 50 years, the change in weather is very much set in place. It is time to step up by not only reducing emissions but also adapting to this inevitable climate change. We bring you a round-up of what governments, insurers and other private companies are proposing and doing.
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Many insurance players are at the forefront of climate change initiatives. Here are samplings of what some of these companies are doing.
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Renewable energy has many proponents, unlike other energy sources, and wind energy is the most popular. Prof Leon Freris, Consultant, and Mr Warren Diogo, Underwriter, both of Ascot Renewco, look at the Chinese wind market, and suggest how international insurers can help with risk expertise and coverage, and to turn its wind turbine manufacturing market into a viable global concern.
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It is not often that a insurance company is offered the opportunity to sponsor an endeavour whose consequences could be described as “crucial” to the future of the Earth’s population. The Catlin Arctic Survey is such a project. Mr Mark Newman, Chief Executive Officer of Catlin Group Limited’s operations in the Asia Pacific region, based in Singapore, shares the urgency of the project and Catlin’s role in it as well as why Asia Pacific countries should be concerned if the Arctic ice melts.
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With temperatures rising due to greenhouse gases resulting in increased evaporation into the atmosphere, the weather machine is seen to be running in “top gear” bringing about intense severe weather events. Professor Peter Höppe, Head of Munich Re’s Georisk Research department, notes the increased number and severity of such events and explains why a climate agreement is urgently needed. He also shares what Munich Re is doing with regard to this issue as it participates in international events to push for more green actions as well as offers new coverage concepts and innovative insurance products to protect the people.
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Climate change is one of the burning issues of today, and “Act now” was the key message delivered during the 15th Indonesian Rendezvous held in Bali last year.
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Mr Nasir A Choudhury, an iconic leader in the insurance industry of Bangladesh, marked the 50th anniversary of his working career last year. Mr Farzana Chowdhury, Vice Chairperson, Board of the Directors, Green Delta Insurance Co Ltd, tells us about this distinguished man and his illustrious career.
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On the largest scale, the climate change problem is at least qualitatively simple – the burning of coal, gas and oil releases carbon dioxide (CO2) into the atmosphere. The overall warming effect resulting from this emission is a subject of key importance for the world, affecting the existence of its species. In this article, which was first published as a Guest Editorial in the Risk Management Newsletter no. 44, November 2008 of The Geneva Association, Professor Reto Knutti from the Institute of Atmospheric and Climate Science in Zurich, explains why the world must take action now and not continue with a “business as usual” attitude or our children will be the ones facing numerous climate catastrophes in the future.
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The resiliency of the global reinsurance market is noted in the latest IAIS GRMR. Dr Sebastian von Dahlen*, Principal Administrator responsible for reinsurance at the Secretariat of IAIS, and Dr Marcelo Ramella*, Assistant to the Chair of the IAIS Reinsurance Transparency Subgroup (RTG), tell us about the report which gives detailed data and analysis as well as market trends and developments and which encourages supervisory recognition.
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Insurance companies today face a variety of challenges arising from external and internal changes. These range from volatile investment conditions, increases in longevity and mortality through to terrorism threats and climate change. Mr Wong Chae Sing, Director and Leader of Protiviti Consulting’s Greater China Financial Risk Strategy & Management, tells us how ERM can help insurers with these challenges and shares key issues and initiatives on how to implement and strengthen the ERM processes in your company.
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The question has been asked – “Is the current financial crisis down to a failure of risk management?”. It is clear that inadequate risk-management practices were a significant contributor to the crisis. This does not, however, represent a failure of risk management, rather a failure in risk-management practices and implementation. Insurers must have an enterprise risk management (ERM) framework in place to successfully manage and guide the business, and improvements are required to existing frameworks to achieve this. Ms Penny Fosker, Senior Consultant, Towers Perrin, Hong Kong, looks at the current state of play, and the improvements that are needed to strengthen ERM implementation.
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It could be said that 2008 saw the “perfect storm”. The sub-prime debacle transformed into a financial crisis of mammoth proportions. Hurricanes Ike and Gustav created high, if not record-breaking, losses. The repercussions of these events will be felt into 2009. Terrorism still looms large. Emerging exposures, such as climate change and nano-technology add to this. The regulators’ response will also impact upon the insurance industry. While hardening rates give some cause for optimism, there are many pressures upon the industry. Mr David Abbott, Partner, and Mr Daniel Futter, Associate, in the Commercial Risk and Reinsurance team at Barlow Lyde & Gilbert LLP, survey some of the legal issues which are likely to arise in 2009.
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In today’s turbulent economic climate, it can be easy for companies to unconsciously turn a blind eye when it comes to taking even the simplest measures to prevent unnecessary property loss. Mr John Rutherford, Vice President, Global Services, Asia, FM Global, lends his insight on the importance of keeping a well-maintained fire pump to prevent and mitigate property damage.
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Mr Debneel Mukherjee, President & CEO of 3i Infotech Asia Pacific, explains why at a time when Asia is fearful, the brave, astute and foresighted need to be fearless and invest in improving core competencies by leveraging on attractive valuation.
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The insurance sector, while escaping the worst of the meltdown scenarios that the banks have seen, has been affected by the global recession like everyone else – with every sign that 2009 will be a very tough year. Mr Nehemiah Neo, Managing Director of vrs Insight, shares how the company, being part of a global group, has the competitive advantage and is able to move into new markets, offering clients its bespoken loss adjusting programmes.
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With nearly US$34 billion in assets under management – not to mention a potential target market of more than 25% of the world’s population – Islamic funds are quickly capturing the attention of the finance world. Principal Financial Group examines this growth which interestingly, could be fuelled by the current financial crisis climate.
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As agriculture is a key sector in Asia, governments have started to use agricultural insurance to foster the prosperity of their farmers and increase food production. This has led to significant growth of the agricultural insurance market, with China taking the number two spot behind the US. Mr Dieter Reist and Mr Yuanyong Long from Swiss Re’s agriculture expert team, share how the insurance industry contributes to sector growth and to tightening the current food demand supply gap in the region.
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The recent victory by North Korea’s state insurer in the English High Court shows that it is still possible for the underdog to obtain justice. Mr Tim Brentnall, Senior Partner and Mr Andrew Stevenson, a Solicitor, both of London law firm Elborne Mitchell which represented the Korea National Insurance Corp tell us how it won the case despite all the prejudicial influence surmounted against it.
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With the theme, “The Gold in Sustainable Pensions for the Silver Market”, the 5th Asian Conference on Pensions and Retirement Planning organised by Asia Insurance Review and held in Beijing, China, saw delegates from about 18 countries gathering to discuss about pension provisions, sovereign pension funds, risk management, sustainability and the green movement in pension provisions.
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Many Asian countries will need to reform their pension systems in order to deliver sustainable and adequate retirement incomes for today’s workers, according to a new joint OECD/World Bank report entitled, Pensions at a Glance: Asia/Pacific.
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Fitch Ratings has commented in its annual review report on the Australian non-life insurance sector, “Australian Non-Life Insurance – Well Placed for 2009”, that although faced with a number of challenges during 2008, the sector is generally well placed heading into 2009.
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Australians are overwhelmingly optimistic about their financial future despite the current economic and financial market uncertainties, according to a survey commissioned by ING Australia to determine why Australians are underinsured.
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CIRC has ordered the country’s insurers with dual listings in Hong Kong and mainland China to adopt a new, uniform accounting standard starting this year. This call by CIRC will likely have a major impact on insurers’ bottom lines, said analysts.
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CIRC has launched a new classification and supervision system for insurers and agencies. As of 1 January, the new system divides these companies into four categories: “A”, “B”, “C” or “D”. The insurers and agencies will be regulated at different levels, depending on their classification.
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Insurance regulator China Insurance Regulatory Commission (CIRC) has urged insurers that failed to meet the solvency standard set by the end of last year to suspend part of their business, according to news reports.
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The Insurance Regulatory & Development Authority (IRDA) has increased the exposure limit of insurers to a single infrastructure company to 20% from the present ceiling of 10%. The aim is to boost the flow of insurance funds for infrastructure financing, said media reports.
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IRDA has eased solvency norms for unit-linked insurance policies (ULIPS), helping life insurers to save millions of dollars in a tight capital market. Industry experts estimated that the new norms will ease capital requirements by 10-15 % or by around Rs10 billion-12 billion (US$207-248 million).
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General insurers in Indonesia are asking for a larger say in the formulation of new regulations so as to avoid undesired negative impact is on the industry, said local media reports.
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Aioi Insurance and Nissay Dowa General Insurance have agreed to merge before becoming a unit of Mitsui Sumitomo Insurance Group Holding (MSIG), according to a local news agency.
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Japan’s second-biggest life insurer, Dai-ichi Mutual Life Insurance, will list its shares on the Tokyo Stock Exchange on 1 April 2010, the insurer said in a statement. The initial public offering is set to be the country’s biggest in a decade.
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Japan has emerged as the most active acquirer nation for the insurance industry, according to a report by global deal tracking firm, Dealogic.
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The Philippines’ Finance Department said it was not amenable to the proposed extension of the compliance period for the government-mandated raising of local insurers’ minimum capitalisation and net worth requirements.
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General insurers in Malaysia will face a difficult 2009 as the global economic slowdown takes its toll on insurance premium growth, according to a statement by Persatuan Insurans Am Malaysia (PIAM), the general insurance association of Malaysia.
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Takaful Ikhlas which has recently entered into its sixth year of operations has won the award for “Best Brands in Product Branding, Consumer – Healthcare Insurance”, an award that was introduced by Asia Pacific Branding Federation (APBF).
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In January, the Monetary Authority of Singapore (MAS) invited public comments on the proposed revised definition of a “Singapore Policy” for insurance policies on life, accident and health as well as personal general insurance sold to individuals.
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2009 is not only challenging but is also laden with possibilities of new business opportunities for South Korea’s financial companies including insurers, brokerages and asset managers, said a local news report.
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BNP Paribas is forming a new insurance joint venture with Taiwan Cooperative Bank (TCB), which is called BNP Paribas Assurance TCB Life Insurance. The joint venture agreement was signed in January.
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In recognition of the approval of raising insurers’ capital by the Financial Supervisory Commission (FSC), a total of 10 foreign life insurers raised capital by NT$80.57 billion (US$2.44 billion) in 2008, 10 times that of the preceding year’s NT$8.72 billion, with six foreign life insurers increasing their capital twice in 2008.
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Vietnam’s population is ageing so fast that there are concerns that the nation’s already overburdened healthcare system would not be able to support the growing ranks of the elderly, said the local media.
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Leaders of the P&C insurance industry in United States expect that the worst of the financial crisis is still ahead, according to a survey conducted by the Insurance Information Institute (III) at its 12th annual Property/Casualty Insurance Joint Industry Forum, held in New York early this year.
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In the light of the ongoing financial and natural catastrophes, the markets generally reported price increases for certain classes of businesses during the January 2009 renewal season, according to reports by major reinsurance brokers.
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