Public-private partnership opportunities abound in APAC

Asia-Pacific represents a huge opportunity for the public and private sectors to work together to create innovate re/insurance solutions to narrow the protection gap and increase insurance penetration, Julian Enoizi (pictured), global head of public sector practice at Guy Carpenter, told Intelligent Insurer.

“If you look at Asia-Pacific as a region, what you can feel when you are there is the opportunity. It’s a very vibrant place, the opportunity is palpable. And certainly, governments are very willing to enter into a dialogue here,” he said.

In the Asia-Pacific emerging economies, one of the most obvious and striking issues is just the size of the protection gap, he said, saying the gap was above 90 percent.

Enoizi said that when you examine the megatrends of mass migration, health, wealth gap, climate change, and urbanisation in Asia-Pacific you can see a huge insurance penetration gap.

“There’s a huge delta that needs to be dealt with by us as an industry. And there’s an opportunity in terms of closing the protection gap through innovative solutions.”

He said that public sector and public-private partnerships can help in the response to these challenges.

For example, he said: “You have the World Bank issuing a catastrophe bond in the Philippines, which paid out $52.5 million to the government of the Philippines in the aftermath of Typhoon Rai. That shows that the kinds of solutions we’re trying to design and implement are actually worthwhile. They actually do yield and can be successful.”

In summary, he said, the opportunities for cooperation between the public sector and insurance industry were around public-private partnerships and the design of innovative models for dealing with difficult-to-insure risk. This, he said, will help to narrow or close the protection gap.

Such partnerships could also help drive the push for greater resilience and adaptation in the face of climate change threats.

“There are all sorts of statistics to show that if you spend a pound in prevention it will translate to protection in terms against future loss, so there has to be an advantage for spending money upfront. The question is how you bring capital sources to do that, and I think the industry is going to have to think very hard about the role it wants to play in society,” Enoizi said.

“There’s going to have to be some form of ‘philanthropic’ approach to this, as opposed to a simple risk-reflective pricing approach, which is not going to be sufficient in the long term.”