Over-regulation poses challenges for the region

The over-regulation of some markets is the hottest topic in Asian insurance at present, Alamgir Kabir senior vice-president of the Asian Reinsurance Corporation, told EAIC Today.

“Many insurers in the territory have been struggling to comply with the regulatory requirements, such as minimum capital requirements or the risk-based capital regime,” he said. “Mergers and acquisitions and winding-up are seen as common. Regulators have also been stringent in some of the countries by limiting reinsurance placement in the overseas markets. Many reinsurers, having sufficient capacity, are not allowed to write their reinsurance business, despite prerequisites being met.”

Over the coming year Kabir expects that penetration will increase in Asia for new products such as health, crop and cyber. The greatest opportunity for re/insurers in the region is disposable income-related insurance buying.

“Tourism is one of the biggest and fastest-growing industries in this region, so personal accident, travel and health can be the greatest opportunities for re/insurers,” Kabir said.

He added that motor is the lead portfolio in most of the countries in the region, and is believed to have potential for further growth. Other than motor, health and crop are the fastest growing portfolios.

Asked about the main challenges for the market, he identified price slashes and additional capacity as key issues.

“It is observed that the primary premium rates of traditional classes are falling. This is due to the abolition of tariffs, unhealthy competition for acquiring business and the fact that many players are bringing additional capacity into the market,” Kabir said.

The Asian Reinsurance Corporation is an intergovernmental organisation established in May 1979 under the auspices of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). Membership is open to all state members or associate members of ESCAP. Since July 9, 2005 associate membership has been open to non-ESCAP member countries of the UN, private organisations, private corporations, non-government organisations and multilateral institutions.

Kabir said the corporation’s biggest achievement to date has been its response to the catastrophic flood loss in Thailand in 2011.

“We are based in Thailand, and 2011’s catastrophic flood loss was the biggest ever cat loss for the region, amounting to nearly $20 billion. Most of the global reinsurers were affected badly by this event. We were also affected badly, but we were able to manage this mega event well and settled the loss without any complaint from the cedants.”