Technology and affordability are keys to closing the protection gap

Technology and affordability are keys to increasing re/insurance penetration in Asia, Kamal Tabaja, group COO for Trust Re, told EAIC Today.

“This is a hot topic at EAIC this year. Some people would say they need to raise awareness of insurance but the fact is that the ability to spend is just not there; even if you raise awareness, that will still be an issue,” Tabaja said.

With 60 percent of the Asian population having little or no insurance, he said it is necessary to minimise the cost as much as possible.

“This would be offset by having a large number of subscribers to these products. At the same time, we have to find distribution methods. I believe that, at least on a regional level, none of the medium reinsurers and also some of the larger ones will be able to pull off something like this on their own.

“Each area has its own culture, and its own understanding of what insurance is—everyone is going to have to pull together to find ways to penetrate this segment of the population. To diversify your exposures, you need to swap with your fellow reinsurers.”
Tabaja also emphasised the importance of building relationships with customers, for example, by providing excellent service after they have bought the product.

“We have to build trust: people need to trust that you are going to provide the service afterwards with no complications, because as soon as you make it complicated they are not going to buy the product.”

Regulators have to play a role in this, he added: they already have the infrastructure to reach out to people—through associations and unions, for example—and regulations can be created that incentivise insurance buying.

“Governments pick up the bill if there is a catastrophe, so it makes sense for them to make insurance very low cost and make it mandatory, or to offer a refund or exemption on something else if you buy insurance,” he said.

Meanwhile, the regulatory environment for re/insurers is causing problems in Asia, he said. A shift from globalisation towards putting up barriers is making the regulatory environment tough for small to medium-sized insurers.

“If regulators want to keep their markets competitive they need to ease the requirements to allow more of the medium tier reinsurers, especially the regional reinsurers that have been serving these markets, to get licensed.”