The M&A market was in a frenzy in July. Suddenly most names were touted as being on the look-out or being a prey. There was widespread speculation and everyone, including staff and shareholders, went into aggressive or defensive strategies as buyers were out in full force. There was so much money being pumped into the insurance market. Just how big is big enough became a conversation piece. And the summer madness won’t end, says A.M. Best which predicts M&A to continue as insurers and reinsurers “increasingly seek ways to deploy capital and create scale against a backdrop of ongoing soft market conditions and weak investment returns”.
What gives? Where will the lovely neighbourhood boys go to play in peace? What drives this sudden spurt? Cost efficiencies, regulatory overdrive, geographical diversity, market share rush, cheaper money with low interest on loans, ageing leaders wishing a legacy, or just plain common sense response to “staying alive”?
These are exciting times. Is this another breeding ground for the insurance Masada? Is a bloodbath a-coming? Will the dynamics change? Will the end consumer finally wake up to embrace insurance?
Will the smaller and niche players be left to continue on the yellow brick road?
As a free trader at heart and a publisher in business, I would like to see more players, more choices and more competition driving each other to greater heights. We came away from monolithic insurers or a single insurer or reinsurer for each market. Are we going back that route?
It is still early days for any real answers in the hot summer stillness. But the frenzy continues in the summer break notwithstanding.
In August, our Cover Story is a review of the frenetic developments in the first half of the year and what a yo-yo it has been with market confidence. But insurers are doing more and doing more things right, except getting the crucial issue of price right. Perhaps it is about pricing the service rather than the product.
But for me, my take is that the insurance industry is more ready than ever to salute the consumer this year. The regional honchos are making the right noises to get there. Just look at the regional interviews we have secured this month for you: with the Pru Asian Chief heralding a major role for insurance in leading Asia’s growth, Manulife’s Asia head puts customers first, and AXA’s new Asian head aiming for a dramatic 700% leap in customers in the next 15 years. MetLife has also just launched an Innovation Centre in Singapore in July to give customers a say in what they want out of insurance in the health, wealth and ageing sectors. So everyone is on cue! The challenge is to get customers to know and love insurance as I do. We dare to dream of insurers leading societal changes -- a tune whistled by no less a persona than Ban Ki Moon, Secretary General of the United Nations at the Global Insurance Forum.
Our Country Profile is on Taiwan which, given the regulatory support, is re-tooling itself as a hub for wealth management, bearing in mind the number of top billionaires found in that part of the world.
With the long August break, despite the fewer ads, we bring you a bumper crop of insights and articles to read and refresh. We delve deep into data-driven business with Big Data being a key; that even regulators have to diligently cope with the changing landscape in the glare of publicity as they tread new frontiers; the continuing refrain on narrowing the protection gap; serving the potential granary of the world; back to school in ERM; making the old more productive at the workplace; revisiting the Nepal quakes to protect and educate children in the aftermath; microinsurance as a key disaster management and recovery tool; and of course business tips on managing costs and improving profitability in Asia.
August is really the time to recover from the stress of the first half of the year, to re-strategise and to make the second half a better tomorrow!
Sivam Subramaniam
Editor-in-Chief
Asia Insurance Review