Making sense of Asia

Asia is a huge and diverse region, and much of what goes on there regarding the insurance industry is a good example of how changes will impact globally.

Chihiro Maekawa, head of property and casualty at Miller Insurance (Singapore), spoke to Intelligent Insurer’s 1.1 Club, the on-demand platform for one-to-one interviews with industry leaders to talk about some of the latest trend and developments for the region, along with its potential.

“Asia is quite difficult to generalise. It’s a very large and diverse marketplace but I would say that there continues to be a gap between the local and international market conditions. For the large and complex risks that require international market support, we’ve seen a slight easing of hard market conditions, with rate increases reducing to single digits or even flattening in some areas,” Maekawa said.

It is not, however, all doom and gloom. “In terms of opportunities,” she said, “with economic activity starting to gain momentum after a long period of lockdown, we’re seeing new infrastructure projects coming through, particularly in the renewable sector. There’s also been increased interest for casualty and financial lines business.”

A recurrent theme in 1.1 Club interviews has been the protection gap across Asia. It is a gulf that the Asian Development Bank provided some estimates for a year ago. That organisation said that the mortality and health protection gaps stood at $83 trillion and $1.8 trillion in 2019. Four years previously, the pensions protection gap stood at $70 trillion and was forecasted to grow by 5 percent each year. The current cyber risk protection gap is estimated at $27 billion in indirect economic losses.

Maekawa mused on the protection gap. “I was reading an article this morning,” she said, “and the property protection gap, according to that, is $134 billion. And with increased nat cat activities as a result of climate change, and with the rise of other endemic risks, this gap will only get bigger. We need to act on it.”

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Getting to grips

There are three key elements to tackling the issue. “First,” Maekawa explained, “there’s accessibility. We need to be able to broaden our reach and make it easier for our clients to access various insurance solutions available to them.

“Second, its affordability. Pricing is always a central factor for insureds in their decision-making process. And it’s knowledge—to educate people as to why it’s important to be protected, what solutions are available to them, and how much protection they need.”

Another key issue driving the market—and which may be more pertinent to the Asian region—has been the rise of environmental, society, and corporate governance (ESG) factors. This links closely with talking about climate change. Maekawa said that the former has become one of Miller’s strategic priorities.

“We’ve made significant steps, particularly on the social and governance side, and we’ve now set out on our next steps on the environmental side. We recognise the role that Miller can play not only by improving our own position, but also as a key player in the insurance sector. We’ve established a dedicated renewable energy team and we’re enhancing their capabilities in this area,” she said.

When Intelligent Insurer spoke to Maekawa, it was the beginning of November. Renewals season was underway. She was asked about how the negotiations around renewals would play out.

“There’s continued scrutiny of the underwriting information that’s needed,” she said, “particularly around risk management information in the absence of physical risks and survey reports that haven’t been carried out because of the pandemic.

“Providing detailed and accurate underwriting information is one of the things that is going to be key in minimising rate increases or the tightening of conditions.

“Miller is here to help clients obtain the best possible coverage for their needs in the available budget, and we’re encouraging clients to come to us early. That gives us the time to prepare the underwriting submissions, brainstorm, look at alternative solutions and negotiate with the underwriters.”

To view full 1.1 Club interview click here