It is important to note that in such a setting, products can be more tailor-fit for identified risk groups, which should be beneficial for both the consumer and the insurer. By ATTY. DARREN M. DE JESUS Early in this administration, the government sounded off its policy for financial inclusion. This is integral in government’s path towards poverty alleviation and fiscal stability. A key ingredient to this is a sound economic system that is protected in cases of emergency, catastrophes and other accidents: This is precisely where insurance comes in. However, certain sectors in society perceive insurance negatively considering the high price of the premiums and its protracted claims process. Neither does it help that the government insurer — PhilHealth — is in such a terrible state right now, bordering to its abolition or, more preferably, privatization. One thing that the government can do now to improve the image of insurance is to make it more affordable for all; hence, the push of the administration for microinsurance. Another item that government may look into is the removal of the tariffs in insurance. Through the implementation of a Tariff Structure for the Non-Life Insurance sector, consumers can be said to be protected by the Insurance Commission (IC) insofar as the motor and fire insurance lines, which are subjected to tariffs. On the other hand, with the detariffication of premium rates, insurers may charge customers as they see fit, allowing them to slash prices to barest minimum. A tariff is added tax levied by the government on specific goods or services. It is additional fiscal revenue for the government, at the same time it regulates certain practices to protect consumers. The Insurance Code mandates the periodical update of the classification structure. In a paper written by Bob Ingco, president of AMI Risk Consultants Inc., on detariffication, it was observed that most of the penalties collected for not following tariffs are due to insurance companies charging lower than what is required due to heavy price competition in the industry. In 2014, the IC recorded 3,368 breaches, resulting in a collection of P5.41 million, wherein the bulk of the penalties originated from the issuance of motor car and fire policies. The following year the commission collected P21 million from insurers for breaches of the tariff structure. I am quite certain more recent records will reveal a continual increase in tariff collections by the IC. Regardless, insurance companies continue to make a profit and seem to be willing to pay the tariffs after making a cost-benefit analysis. This begs the question if it is time for the detariffication of the insurance industry in the Philippines. ASEAN Countries such as Singapore, Indonesia, and Hong Kong have fully detariffied, meanwhile Cambodia and Thailand remain tariffied. Notably, Malaysia has implemented a phased liberalization of tariffs, to avoid the mishap that happened with the detariffication of the insurance industry in China between 2003 and 2006 where the market was not prepared with no Risk Based Capital (RBC) System in place, causing major solvency issues in companies to maintain operating cash flow. Notably, the Philippines IC has these systems in place, in addition to the tariffs. The nullification of the tariff structure shall give insurance companies freedom in product pricing, rendering the market to be even more competitive than before, reminiscent to a laissez-faire policy made famous by economist Adam Smith. Insurance companies may develop internal pricing policies that are centered on its risk appetite, thresholds have to be established in order to maintain capital adequacy and risk-based pricing shall be the key to success for each company. It is important to note that in such a setting, products can be more tailor-fit for identified risk groups, which should be beneficial for both the consumer and the insurer. In motor, insurers may load the added cost of providing a policy for a much older vehicle and lower risk drivers may be charged with lower premium rates. There now exists insurance technology or “insurtech” that allows drivers to customize their insurance on a per usage basis that should demand more flexibility in pricing of premiums, aka “bespoke insurance.” The question is whether the Philippines is ready for the abolition of tariffs, the same way if we are prepared for the abolition (or privatization) of PhilHealth. These are bold moves in our insurance industry that may see exponential growth if properly pulled off. Let us continue discussions for us to eventually know the answer. For comments, email him at darren_dejesus@cocogen.com or tweet him @darrendejesus. This article originally came out in www.tribune.net.ph https://tribune.net.ph/index.php/2020/10/23/free-market-in-insurance/

The National Reinsurance Corporation of the Philippines (NatRe) just won Reinsurer of the Year in this year's Asia Insurance Industry Awards. According to Asia Insurance Review, the organizer of the event, NatRe was lauded for its involvement in several initiatives aimed at promoting climate-risk insurance, pursuing reinsurance pooling opportunities and advancing risk-informed decision making. Amidst pandemic-induced confusion in the market - and turbulent economic conditions globally - NatRe stood tall together with 16 other heroes of the insurance and risk-management sector recognised for excellence at the highly-prestigious awards ceremony held online the night of November 2, 2020. Congratulations to PIRA Chairman Allan Santos for this huge victory for our country which came at the heels of the successful hosting of the Philippines of the 46th ASEAN Insurance Council (AIC) and 23rd ASEAN Insurance Regulators Meeting which he also headed. Photo © Cherry Sumague-Palacio

October 28, 2020 | Virtual HIGHLIGHTS OF THE AIC-AIRM MEETING

Regulators and leaders of the insurance industry all over the 10 countries of Southeast Asia gathered online for the 46th ASEAN Insurance Council (AIC) and 23rd ASEAN Insurance Regulators Meeting (AIRM), both hosted by the Philippines. Thanks to videoconferencing technology, however, insurance regulators and insurance industry leaders from 10 countries of Southeast Asia were still able to meet, discuss the challenges they are all facing, and propose solutions and directions moving forward. For several days in October, leaders from the life and general insurance sectors from Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, the host Philippines, Singapore, Thailand and Vietnam met through Zoom videoconferencing -- a first in history -- to update themselves of what each has been doing based on what they have agreed in their previous meeting in Nay Pyi Taw, Myanmar last year. ​ The leaders also spotlighted how Covid-19 is affecting their jurisdictions, and how the insurance sector is trying to survive and thrive amidst these trying times. In the latter part of the month, it was the regulators' turn to meet, and they followed it up with a Joint Plenary Meeting with industry leaders. ​ Insurance Commissioner Dennis Funa from the Philippines, who chaired this year's meetings, was elated at their success in serving their purpose of enabling a healthy exchange of ideas among the leaders. ​ Among the major points discussed in the meetings were the following: 1. Cross-border issues for motor vehicle insurance that affect the countries in the Southeast Asian mainland; 2. Insurance for natural catastrophes which mostly affect disaster-prone countries like the Philippines and Indonesia; 3. Agriculture insurance which is very successful in Thailand. 4. Digital innovations such as online examination for agents and other approaches to address the limitations from Covid-19 lockdowns; 5. The continuing development of insurance education, especially in the field of insurtech; and 6. Insurance products for the pandemic. PIRA Chairman Allan Santos, who also chaired the events' organizing committee, highlighted the "silver linings" in the Covid-19 crisis, among them the industry's accelerated adoption of digitalization and the fresh realization of people of the need for insurance.

Specialist insurer Beazley has reported that middle market organisations have been especially hard hit by online social engineering attacks during the pandemic. In the second quarter of 2020, cybercriminals targeted businesses that remained open during lockdown where many employees were working remotely, making them more susceptible to cyberattacks. Of all the social engineering attacks reported to Beazley Breach Response (BBR) Services globally in Q2, 60% of organisations targeted were in the middle market (defined as over $35m in annual revenue), up from 46% in Q1. Social engineering involving a system infiltration remained at a steady rate in the first half of the year. Fortunately, in more than 80% of reported incidents, the attack was stopped before a direct financial loss occurs. “Middle-market organisations have been resilient in maintaining their day-to-day operations during the pandemic and, in turn, their employees are more available to be targeted. Additionally, cybercriminals are executing more sophisticated attacks and middle-market organisations provide richer targets,” said Beazley global claims team lead for cyber & tech Kimberly Horn. Fraudulent instruction attacks also primarily hit middle market organisations, which were the target in 55% of incidents, compared to 24% in Q1. In looking at individual sectors, healthcare, financial institutions, manufacturing, real estate, and education were the most targeted industries in Q2. By Amir Sadiq Link to original post: https://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/73708/Type/eDaily/Middle-market-cyberattacks-rise-during-the-pandemic

South Korea's largest general insurer Samsung Fire & Marine Insurance (SFM) consistently outperforms its domestic peers in underwriting profitability with a superior level of stability, notes AM Best. The insurer’s combined ratio was the lowest in South Korea’s insurance industry for 2019, despite an industry-wide deterioration in underwriting performance during the year. More recently in 2020, SFM reported better underwriting performance, mainly driven by improved profitability in the auto insurance line following a series of rate hikes since 2019, and a reduced car accident rate during the COVID-19 pandemic. Combined with the impact of increased rates in the auto insurance line, AM Best expects this positive underwriting trend to continue into the second half of 2020 amid the current pandemic. AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa+” of SFM. AM Best also has revised the outlook to stable from negative. The ratings reflect SFM’s balance sheet strength, which AM Best categorises as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management (ERM). SFM’s risk adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed at the strongest level, underpinned by its substantial capital and surplus of $12bn at year-end 2019. Its robust balance sheet strength is also supported by the company’s low asset and underwriting leverage compared with its domestic peers, as well as highest regulatory risk-based capital ratio within South Korea’s non-life insurance segment. Investment SFM’s investment strategy is deemed highly conservative; the majority of its investments are allocated in fixed-income assets while the company maintains a relatively small proportion of overseas and alternative investments compared with its peers, which offsets concentration risk from its affiliated stock holdings. Notwithstanding the increasing pressure on investment yield amid an ultra-low interest rate environment, AM Best expects investment income to maintain a solid base for the company’s overall bottom line given its substantial volume of investment assets. Business profile With a strong brand and a large captive agent distribution network, SFM has maintained its leadership position in South Korea’s non-life insurance segment, accounting for approximately 24% of total industry premiums in 2019. SFM also has a dominant presence in the online auto insurance segment. As the pioneer in South Korea’s online auto insurance business, SFM has a strong competitive advantage, which includes its high quality customer base, a large accumulated database and the scale to maximise cost efficiency. SFM has a limited presence in overseas markets, but its global expansion strategy marked a notable advancement in 2019 as the company acquired a significant minority stake in Canopius Group, a participant in the Lloyd’s market. SFM is actively seeking global business opportunities in collaboration with Canopius. With a group risk management culture entrenched in the organisation and a robust governance structure, SFM’s risk management capabilities are superior to its domestic and international peers with similar business profiles. By Asia Insurance Review Team Link to original post: https://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/73715/Type/eDaily/South-Korea-Samsung-Fire-Marine-shows-highest-profitability

The landmark verdict by the London High Court on Tuesday, in the business interruption (BI) test case brought by the Financial Conduct Authority (FCA), could serve as a guide in assessing similar BI-related claims arising from the pandemic in Asian countries that follow the common law system. Speaking to Asia Insurance Review, Willis Towers Watson head of claims in Asia Neil Thomas said, "The judgement is obviously applicable to UK insurers and policyholders but it is likely that other common law jurisdictions in some Asian countries will be following this case closely and may choose to follow the UK court decision. "For policyholders in the UK or elsewhere, even here in Asia ,who have had their COVID-19 BI claims rejected or who have deferred submitting a claim, it would now be appropriate to review their circumstances in light of the UK judgement and open a discussion with their insurers if a claim seems likely to be covered.” While describing the verdict as a ‘significant win for policyholders’, he warned that the 160-page judgement had many nuanced findings and many not please every policyholder. "There is the possibility that the judgement, or aspects of it, will be appealed so the matter is not definitively settled at this point although insurers are likely to take careful notice of the judgement and will review their portfolios in light of the findings." The Chartered Insurance Institute (CII), meanwhile, issued a statement on the eve of the verdict urging the insurance industry to focus on product governance, including having greater clarity on product wordings, in order to avoid a similar episode in the future. "Where the same words and phrases are used in different contracts, there should be a consensus among professionals about what those terms mean, so that consumers can be reassured that two policies that look the same on paper cover the same risks," said the CII. It also called for improvement in the advisory process to help clients better understand both the insurable and non-insurable risks they face; as well as for the industry to establish an approach to systemic risks, such as pandemics, that would clearly set out the scope of government intervention for risks to be co-insured between the public and private sector. By Ridwan Bin Abbas, Asia Insurance Review Link to original post: https://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/73680/type/eDaily

Leading insurers from across the globe—representing over 10% of world premium volume and USD 6 trillion in assets—and the UN Environment Programme (UNEP) have released a progress update on a pioneering initiative to enhance the insurance industry’s assessment of climate change futures. This progress update serves as a prelude for the final report to be published by the end of the year. Over the past eight months, 22 insurers have been working together under the auspices of UNEP’s Principles for Sustainable Insurance Initiative (PSI)—the largest collaboration between the UN and the insurance industry—to explore and pilot methodologies that insurers can use towards implementing the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD). The overall aim of the pilot project is to contribute to the development of consistent and transparent analytical approaches that can be used to identify, assess and disclose climate change-related risks and opportunities in insurance portfolios in a forward-looking, scenario-based manner. Climate change risk assessment based on forward-looking information and climate change scenarios is a central component of the TCFD recommendations, and is arguably the most challenging to implement. The pilot project assesses climate-related physical, transition and litigation risks in the context of insurance portfolios. In the financial sector, this insurance project represents a pioneering initiative that assesses these climate-related risks in one major study. The 22 insurers participating in the project are listed below together with their respective countries of domicile: Allianz (Germany), Aviva (UK), AXA (France), Desjardins (Canada), Generali (Italy), IAG (Australia), ICEA LION Group (Kenya), Intact (Canada), MAPFRE (Spain), MS&AD (Japan), Länsförsäkringar (Sweden), Lloyds Banking Group (UK), Sompo Japan (Japan), Munich Re (Germany), NN (The Netherlands), QBE (Australia), Storebrand (Norway), Swiss Re (Switzlerand), TD Insurance (Canada), The Co-operators (Canada), Tokio Marine (Japan), and Zurich (Switzerland). The key findings reflected in the progress update, Using hindsight and foresight: Enhancing the insurance industry’s assessment of climate change futures, will be presented in a PSI global webinar next week. On 17 September, two webinars will be held to cater to different time zones: 1st webinar: 9:00 to 10:30 am Central European Summer Time Register: https://bit.ly/PSI-TCFD-webinar-1 2nd webinar: 3:00 to 4:30 pm Central European Summer Time Register: https://bit.ly/PSI-TCFD-webinar-2 For more information, please contact the following at UNEP’s Finance Initiative: Butch Bacani, PSI Programme Leader: butch.bacani@un.org Manuel Lonfat, PSI-TCFD Project Manager: manuel.lonfat@un.org Kai Remco Fischer, Climate Change Lead: kai.fischer@un.org

In a bid to fast track the standardization of trainings and qualifications for insurance professionals in all ASEAN member countries, the ASEAN Insurance Council has partnered with the ASEAN Qualifications Reference Framework (AQRF) Committee for its ASEAN Insurance diplomas. Attending the 8th AQRF Committee meeting held online last 24 August 2020, AIC Education Committee Chairman Michael Rellosa and AIC Executive Director Bern Dywanto officially conveyed the AIC’s intention to benchmark the ASEAN Insurance Diplomas with the AQRF. The AQRF is a regional common reference framework that functions as a device to enable comparisons of qualifications across ASEAN countries. It addresses the gaps in the education and training sectors and the wider objective of promoting lifelong learning. Mr. Rellosa noted that as the ASEAN strives to build a single economic community with a free flow of goods, services and investments, the need for a standardized training and qualifications assessment for human resources become more paramount. AQRF Committee Chairperson Megawati Santoso said the ASEAN Insurance Diplomas is the first sectoral qualifications program formally referenced to the AQRF. “The ASEAN Insurance Diplomas could pave the way for other sector to improve and harmonize their education and training qualifications through benchmarking their regional qualifications to the AQRF,” she said. “We sincerely hope that the ASEAN Insurance Diplomas will be successfully implemented and contribute to greater mobility of ASEAN professionals in the region.” Meanwhile, Professor Ir. Nizam, the Director General of Higher Education in Indonesia, spoke at the AQRF Committee Meeting and highlighted the need to accelerate ASEAN’s collective efforts in promoting education especially in the midst of the ongoing Coronavirus (Covid-19) pandemic. “With most education and training institutions, from early childhood up to higher education and beyond, being forced to move their learning platforms online, the need for massive quality assurance in online learning has never been more important. Not only is it important for us in recognizing academic and professional achievements of current and future students and professionals, but also assuring the quality of education and training received by our younger generations to pursue their future livelihood,” he said.