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By Herminia S. Jacinto "Back to the Future — Empowering East Asian Insurers for 2044 and Beyond." This was the theme of the recent Conference of the East Asian Insurance Congress or EAIC. The conference was held at the Hong Kong Convention and Exhibition Center and attended by over a thousand delegates from countries all over the world. The EAIC, composed of 12 cities from Asia and the Asean region, holds conferences in each city every two years. The last face-to-face conference was held at the Marriot Convention Center Manila in 2018. Hong Kong, the host city this year, made sure that all the events were impressive and enjoyable starting from the Grand Opening and the well-attended Gala Night. A much-awaited event was the performances from the cities, usually with song and dance numbers highlighting their cultures. Our city's performance was one of the most applauded. The conference is also a marketplace where the various players in insurance converge and meet about common issues and topics. It is a good opportunity to look for new businesses and renew old ones. Other global players put up meeting rooms complete with snacks and coffee to signify their presence and availability for business. But beyond the fun and camaraderie, the program was like a buffet of topics about insurance, products and customers and most importantly, about people. The format of the panel discussions was simple and encouraged the exchange of ideas and expertise among the panelists. Several panels dwelt on the importance of customer centricity and how to constantly improve the business process starting from the selling of the policy of insurance to the handling and payment of claims. An interesting topic was entitled "Confronting the common foe: Rectifying the image and increasing visibility of insurance in the socioeconomic value chain." The panel members said there is still a lot that we can and should do to improve the image of our industry. Buyers of insurance, especially in the business sector, should appreciate that it's their insurance coverage that will eventually bring them back to business after a loss occurs. Hopefully, in the future, the customers will go and buy insurance as if they are buying shoes and clothes! Will insurance be on the grocery list of the housewife? The topics about manpower or the shortage of talent in the insurance industry were the most interesting and useful to me since I am the current chairperson of the board of our Insurance Institute. One panel talked about changing perceptions and reshaping insurance as a career. The panelists shared that insurance was not their choice of career after graduation from college. Some said that they had accidentally gone into insurance. Of course, they were one in saying that despite the circumstances of their joining the insurance industry, they have stayed and enjoyed their work. It is difficult enough to attract talent into the industry; the other challenge is how to keep them. The pandemic has changed the ways and style of working. Employees look for companies where there is a flexible work schedule. Since technology has made it easy to work from home, employees, especially working mothers, request that schedule for maybe twice a week. One topic that drew a lot of reactions from the audience was "Diversity, equity and inclusion in insurance: Linking diversity to performance." The panelists agreed that diversity in age, gender, education and background can affect performance in a company. But creating an environment that is open and fosters diversity in thinking can reduce diversity among employees. I threw in my suggestion that, as much as possible, employers should encourage training and changes in positions or roles in the organization to allow the workforce a diversified experience. Looking ahead into the future, the delegates to the conference think that the top challenges facing the industry now are AI, cyber, pricing and profitability, compliance, fraud and inflation. Source: manilatimes.net

Buckle up in the EAIC’s time-travelling DeLorean automobile Never before has the EAIC community been more in need of a crystal ball than it is today – with the myriad threats of climate change, cyber risk, uncertain interest rates and rising geopolitical tensions facing the entire region. Thankfully, this edition of the East Asian Insurance Congress, held in the vibrant city of Hong Kong, has never before had such a prescient theme – ‘Back to the Future – Empowering East Asian Insurers for 2044 and Beyond – Building on the Foundation and Exploring the Future’. The days ahead are bursting with ‘must-attend’ sessions guaranteed to get delegates thinking and offering insights for winning insurance strategies. Delegates are sure to leave the conference with a real competitive advantage over those who have missed out. Each day, Asia Insurance Review through its official media partner status with EAIC, will offer delegates a recap of what’s been discussed – and some fascinating insights of our own – in this daily newsletter, available both in print and digitally. Every single major risk and technological development to face the insurance community in East Asia will receive a thorough airing in the days ahead – insights from some of the brightest minds and smartest thinkers that the sector has to offer. Some of the headline issues that will be tackled include economic uncertainty for a resilient future, derisking climate change, sustainability, technology, the gender gap, insurance literacy and the war for talent. And of course, the four days of EAIC 2024 will also allow plenty of time to catch up with old acquaintances and make new ones. If future success is awarded to those who are best prepared, there can be few forums more geared to arming insurers with all the weapons they need to win the competitive battle that looms ahead over the next decade as AI begins to take centre stage. - Mr Paul McNamara, Editorial director, AIR and MEIR Back to the future L-R: Ms Sally Wan, Messrs Michael Wong, Michael Rellosa and Ivan Tam The 30th EAIC opened its doors in Hong Kong yesterday evening, with the Hong Kong government’s acting financial secretary Michael Wong kicking things of by addressing the various issues that the insurance industry is attempting to solve in the coming years. “[Climate change] is a present-day problem, and we believe that insurers have the ability to absorb its impact,” he said. “The insurance industry in Hong Kong have taken steps to ensure sustainability through initiatives such as insurance-linked securities and catastrophe bonds, which will offload unwritten risks to the capital markets. He highlighted the measures that the Hong Kong government took to promote ILS in 2021, which has led to five issuances, totalling $713m. “We believe that the insurance sector has a growing role to play in helping the world mitigate the impact of climate change,” he said. EAIC president and Philippines Insurers and Reinsurers Association executive director Michael Rellosa took the stage afterwards, stating that the insurance landscape in East Asia has undergone several transformations since EAIC’s inception 62 years ago. “[These changes] were driven by advancements in technology, shifts in regulatory frameworks, evolving consumer expectations and global events that have tested our resilience and our adaptability,” he said. This year’s themes of innovation and adaptation are more relevant than ever, he said, as the industry attempts to navigate the complexities of the modern age. “The insurance industry, like many others, have been thrust into the spotlight by the challenges of the COVID-19 pandemic,” he said. “The experience underscored the vital role that insurance plays in providing security and peace of mind for individuals, families and businesses alike.”  The pandemic has forced the industry to rethink its strategies, embrace digital transformation and prioritise customer-centric approaches. “As we emerge from this period of uncertainty, the need for robust risk management solutions and the ability to rapidly respond to evolving needs have never been clearer,” he said. The next few days, he said, will allow the industry to explore various topics that have the potential to shake up the insurance landscape once again, from the rise of AI and big data analytics, to the importance of sustainability and ethical practices, all of which are critical to the industry’s success. Navigating current uncertainties with technology Mr. Bernard Charnwut Chan Five years ago, AI was not a common term, but today it is touted as the main driver of change around the world. The insurance industry is no different in this regard, but Asia Financial Holdings chairman Bernard Charnwut Chan has some questions for the proponents of AI. “How will it change the industry? Who will regulate it? Where are the transparencies? Who is setting the rules?” he said, during his presentation at EAIC yesterday morning. “There are no answers to these questions, but one thing is for certain – AI is not going away,” he said. He also brought up the fact that industries today are all married to technology, with terms like fintech, InsurTech, regtech and medtech being introduced over the past decade. “Industries are no longer siloed. When I first began chairing the committee for the innovation and technology scholarship scheme, it was all science students. Today, we have students from across all disciplines. That’s why it’s ‘fin’ plus ‘tech’ – but the question is, who is leading?” he said. All this focus on technology, he said, could be an avenue for the insurance industry to attract and retain new talent, to increase excitement for new graduates to join the industry. Hong Kong’s new role Mr Chan also noted that over the last 40 years Hong Kong had been the gateway for capital to flow into China, but with the rapid growth and reform of the Chinese economy, Hong Kong’s role has changed. “Today, Chinese enterprises can no longer position themselves as ‘just a Chinese company’. They must diversify, so they are expanding outside of China,” he said. “And Hong Kong’s new role is helping these enterprises de-risk.” De-risking is the new term du jour, he said, and it will be here to stay for the next 10 to 15 years. “We can no longer afford to have a concentration of business in one place, one location. Each country will have to grapple with this issue in its own way, and as a service industry, we have to find a way to help them achieve this goal.” With all of these changes in dynamics, one thing remains true: The insurance industry must remain resilient, adaptable and always be engaged, he said. Industry needs to build workforce for next generation Mr. Franz Hah By 2033, the Asian insurance industry will need a total workforce of 2.3m people. The industry currently has a workforce of about 1.1m, but a large portion of those will be over the age of 60 within 10 years. “Already in every company across Asia we are saying that we lack talent,” said Peak Re CEO Franz Hahn, during his presentation yesterday. “Getting another 1.2m people for our industry is a tall order, and the same even applies to the US and Europe. We need to think creatively about how we recruit people and how we retain them.” At the same time, he also said that the way the industry currently operates is not sustainable, calling the competition for talent between companies ‘unhealthy’. “We cannot just fulfil our needs for talent and snatch them from other companies. We have to learn to get better, to hire and build people from within the company.” He said that it is vitally important for (re)insurers to become ‘learning organisations’, a place that can attract and develop fresh talent. He also emphasised the importance of ‘lighthouse talents’, the older generation of workers who are nearing retirement, but can still help develop the newer generation. He also said that the boomer generation had made a big mistake in failing to create a solid workforce and talent pool from which the industry could draw. “My generation has been failing miserably to bring good people into the industry and to retain them in the industry. And that’s why we have the problem we have today,” he said. “We have to broaden our sources of recruitment. Recruiting firms have been helpful for us, but we also have to go into schools and universities and get people who are at the early stage of work,” he said. Between meritocracy and diversity, Mr Hahn said that he would always vote for the latter. Diversity is vital, even for nationally-operated organisations. “This diversity can take a different form, mainly in the form of people who think differently,” he said. “You want to get new ideas, new thinking, you want to be challenged as an organisation.” “Diversity is also not just about gender and sexual orientation, but also age diversity and having people from different professional and personal backgrounds,” he said. “Our industry is one that deals with all kinds of different professions and industries, so having a nice mix within our organisation will help us be successful.” Customer centricity thrives on technology L-R: Messrs Lars Lange, Michael Rellosa, Somporn Seubthawilkul, Jason Tsai and Ms Andrea Keenan Insurers used to win long-term clients through coverage, limits and premiums, as clients were mostly interested in the financial advantage, said Nan Shan General Insurance chairman Jason Tsai. Speaking on the panel on customer centricity, he said that cheaper prices would allow an insurer to win over clients quickly and easily, but it was not a sustainable approach, especially if an insurer was looking for long-term, loyal clients. “The good news is that we can ride on the rapid development of technology today and reshape the idea of product design – from what we sell, to where we sell and how we sell,” he said. “In a sense, we are reshaping the battlefield.” Many insurers have already taken this customer-centric approach by having more diverse and user-friendly methods of buying insurance and developing more ‘tailor-made’ products. Mr Tsai brought up usage-based insurance and fragmented policies as examples, which would allow customers to deploy their insurance coverage at different parts of their daily life. Philippines Insurers and Reinsurers Association executive director Michael Rellosa also expanded on the topic, noting that the workforce of today is increasingly made up of millennials and Generation Z – the digital natives. He said that a lot of insurance is about filing – filing the policy application, filing the claim. “Customer centricity is about removing pain points, so the transition to digitalbased transactions makes sense, especially for these digital natives. “Technology plays a huge part in making this happen and continuing to improve the experience of the customer across the insurance value chain,” he said. “If your organisation can work this into your systems and processes, then you’re already ahead of the curve.” International Union of Marine Insurers secretary general Lars Lange also said that the ideal client situation is when an insurer can build up expertise and experience, pass on what they have learned to clients to mitigate their risks and insure the remainder of the risk. “That is what our industry is about, no matter what line of business you’re in,” he said. Thai General Insurance Association president Somporn Seubthawilkul also said that ‘industry disruptors’ such as fintechs and InsurTechs were not actually disruptors. “They are the total opposite to me; they only disrupted the insurers who refused to change,” he said. “But if we truly want to change, instead of waiting for an outside party to come and disrupt us, we have to set up and disrupt ourselves.” Japan to host 31st EAIC in 2026 Delegates from Japan Twenty-four years after Japan last hosted the EAIC in 2002, the nation is set to welcome delegates again in 2026. EAIC new board member and Life Insurance Association of Japan director of international affairs Hiroshi Tange said, “We are honoured to host the event in 2026, and look forward to welcoming all delegates. We will be preparing for the conference from now on, figuring out the theme and topics that will be important for the industry for us to cover.” He also said that the committee will be putting a Japanese spin on the next edition of EAIC, although they are not yet certain what form that will take. “Japan hosted the first EAIC in 1962, so we are excited for it to return. That first edition started with 140 delegates, and today there are over 1,000 delegates in Hong Kong, and it has expanded beyond East Asia to include participants from all over the world. We intend to build on the great efforts from the other member cities in the development of EAIC and carry on this momentum,” he said. Mr Tange also said that the committee intends to make positive changes to the next edition of the EAIC to make it sustainable. Dates and venue of the 2026 EAIC will be announced at a later time. Strength in diversity L-R: Mr Candric Cheng, Ms Fiona Harris, Ms Herminia Jacinto, Ms Alice Liang and Mr Patrick Graham In the increasingly competitive environment of life insurance in Hong Kong, AIA Hong Kong and Macau chief proposition officer Alice Liang said that an insurer needs the right talent and right people to make sure that it continues to surpass its customers’ expectations to deliver a compelling proposition. “The talent asset is the most sustainable competitive advantage an organisation can have. And when I was building up my team, it was less about focusing on diversity,” she said. “But when I look at filling the roles, I tried to hire individuals that can augment the skill sets that we already had. And that has meant that if you look at my management team, it’s not just gender balanced, they also come from very different backgrounds.” Insurance Institute for Asia and the Pacific chairman Herminia Jacinto echoed the sentiment, saying that diversity mattered less when compared to talent, experience and education – and as opportunities became more reachable for people across various backgrounds, diversity will come naturally. Diversity must also encompass more than demographic identity, said Bupa Hong Kong managing director Fiona Harris. “Diversity in backgrounds and experience matter just as much. I’ve been really privileged to work across a number of different functions and disciplines and with many different teams and diverse teams in many different roles. And I’ve also always felt that when you bring a diverse and inclusive team together, you get something that is greater than the sum of its parts.” Beyond hiring a diverse team, an organisation must also create an environment that is open and fosters diversity in thinking. “Having the right people and the openness culture in the organisation is critical to enable that innovation,” said Ms Liang. Adapting to new risks L-R: Mr Christopher Hui, Mr Eric Hui, Ms Chelsea Jiang, Mr Lubomir Varbanov and Mr John Zhu Starting this week, the Hong Kong stock market will remain open during typhoons as one measure to enhance resilience of the economy, said Hong Kong secretary for financial services and the treasury Christopher Hui. Speaking during the panel on derisking climate change, Mr Hui said that with this arrangement, Hong Kong is now in line with international standards. “And at the same time, to ensure not just international investors in Hong Kong, but the global investors in our security, futures and derivatives market, and the investors that are trading in the mainland markets through our Stock Connect programme can also benefit.” He said that in light of the increasing frequency and severity of natural disasters Hong Kong must be prepared. “We are being very focused in what we should do. On the adaptation side, we have to prepare specific sectors of the economy, including power generation, to be on par with the global trend for carbon neutrality. And specifically on the side of mitigation, we will try to reduce the impact that these natural disasters will have on our economy in specific areas.” Swiss Re managing director and head of public sector solutions, Asia Pacific Lubomir Varbanov also highlighted the mitigation-adaptation axis and how it is a difficult balance to achieve. “Much of the public discourse when it comes to net-zero energy transition, quite rightly, has been focused on mitigation. But our view is that at this point, it’s incontestable that some climate change has already taken place, and therefore we need to recalibrate our efforts.” According to him, adaptation is simply a question of how people can continue to live comfortably in a world that is warming and a world where extreme weather events are happening regularly. “This polycrisis calls for a different kind of solution and a need to have public private partnerships, because absent an adaptation in approach, if nothing happens, rates will go up on the street simply to match the increased use.” What is needed is active adaptation and risk management to lower the insurance costs for protected assets. “And we could, I believe, get into a virtuous circle where we, as insurers and reinsurers, take on certain elements of risks that we are best placed to do,” he said. “In doing so, whether it’s Nat CAT risk, political risk, supply chain disruption risks, we can provide more comfort to investors, which means very practically, specifically lowering the cost of capital, which in turn allows some of these adaptation projects which are so critically needed to go ahead.” AXA General Insurance Hong Kong chief technical and innovation officer, greater China Chelsea Jiang said that bringing the customer along during the adaptation process is another challenge. “People feel the rain and the wind and the floods, but do they truly understand what the future looks like?” she said. “If we don’t accelerate the pace of adaptation, we’re just going to see a worsening trend of natural disasters and climate related losses. We need to bring this understanding to our customers, to work with governments and regulators to help our customers understand the risk they face, and how that is going to change over time so that they can prioritise and focus on the different adaptation measures that they should take.” Mr Hui also said that collaboration between government and the private sector must result in tangible projects. “I think it’s important in a sense that people know that it’s something that is really coming and it’s something they can relate to,” he said. “We also have to ensure that there is a certain degree of public participation, because no matter how moral or how polemical we can be about our green agenda, with Hong Kong being a financial centre, people are very practical in terms of how they see things,” he said. Collaborating towards sustainability L-R: Mr Butch Bacani, Mr Clement Lau, Ms Orchis Li, Mr Masayuki Tanaka and Mr Edward Moncreiffe True sustainability implies intergenerational equity, said United Nations Principles for Sustainable Insurance (UNPSI) programme leader Butch Bacani. “It’s development that meets the needs of the present, without compromising the needs of future generations. So, if you believe in sustainability, you must believe in intergenerational equity, not just this generation, but future generations as well.” He also added that sustainability is ultimately social and that the interconnectedness of the environment, society and the economy must be made clear to everyone. “However, Asia is disappointing when it comes to collaborating in this regard. With the region being the world’s most disasterprone region consistently over the years implies that Asian insurers should be collaborating really well on a number of fronts - on resilience, on health risk prevention, on decarbonisation, on reversing nature loss. That’s not happening when compared to your peers globally,” he said. “Asia’s participation in the various UN frameworks is totally disappointing when it should be championing this idea.” However, he also said that the ‘tiger is waking up’, pointing out that insurers across Japan, South Korea, China, Hong Kong and Singapore were firm supporters of the UNPSI, and time will tell if Asia can meet the challenge. EAIC secretary general Masayuki Tanaka said that Asia must also focus on sustainability literacy. From a business standpoint, he said, many managers find out about the projected temperature rise in 2100, but they do not know how to respond to that information. “You need intermediaries to translate the scientific information to normal words that everybody can understand, which businesses can then use to make decisions,” he said. “The insurance industry must then also contribute to the education of the public when it comes to sustainability, which will also lift the status of the industry,” he said. Some insurers have also noted the challenges in meeting increasingly demanding sustainability reporting requirements coming from regional bodies and local regulators. Hong Kong Insurance Authority executive director Clement Lau said that in Asia, there has been some harmonisation of regulatory requirements, especially in the field of standard setting. “We all know that the ISSB standards, for example, which were promulgated last year, did not just come from nowhere, but were premised on a number of pieces of previous work, such as the TCFD recommendations and the Sustainability Accounting Standards,” he said. “As things evolve, regulators and standard setting bodies see the need for harmonisation. The IA participates in a number of international and also regional forums. I think what we can do is induce more discussions among the regulators in these forums, with regard to the latest development in terms of the standard setting and, and of course, we need to work closely with the standard setting bodies.” Gen Re general manager, Hong Kong Orchis Li pointed out that an often-overlooked part of sustainability lies in the medical field. With medical inflation rising all over the world, and life expectancy rates climbing – especially in Asia – insurance prices might become quickly unaffordable in a few decades. “Healthcare is an especially difficult and complex issue because it involves a lot of stakeholders. We need the government to come up with policies. We need the regulators to regulate the insurance industry,” she said. Alongside the medical professionals, there are also health technology companies, patient groups and the patients and policyholders themselves. “Basically, everyone has a part in this. And it’s not the insurance industry alone that can solve the issues, no matter how much we innovate and adapt to customer needs and demands,” she said. Mr Lau also pointed out that in developed markets such as Hong Kong, affordability of healthcare is the main issue, but in developing nations, accessibility is the focus. This is where insurers have a strong lever to pull, said Mr Bacani. “It’s not just the protection gap, it’s health risk prevention, two things that are mutually reinforcing. The more you’re able to reduce risk, the more you can make insurance more accessible, affordable and sustainable,” he said. Source: asiainsurancereview.com

By Michael F. Rellosa The Philippine Insurance Industry is gearing up for the January 2025 start of the IFRS17, an international financial reporting standard for insurance contracts locally known as PFRS17. However, in a survey conducted by PIRA, its trade association, 39 out of its 55 member companies have responded, saying only 16 out of the 39 companies are ready with a process to be able to provide the quantitative impact assessment that IFRS17 calls for, with the remaining 23 in various stages of being ready. It must be noted that IFRS17 has significant implications for the general insurance industry. Here are some of the pros and cons: Pros 1. Increased transparency. IFRS 17 enhances transparency and comparability in financial statements. It requires insurers to provide more detailed information about their insurance contracts, which can improve the understanding of their financial position for stakeholders. 2. Improved consistency. The standard aims to unify accounting practices across different jurisdictions. This consistency can simplify the assessment of insurers' financial health and performance, especially for multinational companies. 3. Enhanced risk management insights. By requiring insurers to disclose more detailed information about the timing and amount of future cash flows, IFRS 17 encourages better risk management practices and helps insurers manage their liabilities more effectively. 4. Better performance measurement. The standard allows for a more accurate reflection of profit over time, aligning revenue recognition with the insurance coverage period. This helps stakeholders evaluate an insurer's performance on a more consistent basis. 5. Focus on future cash flows. IFRS 17 emphasizes the importance of future cash flows, which can lead to improved forecasting and planning capabilities for insurers. Cons 1. Implementation costs. The transition to IFRS 17 involves significant costs related to system upgrades, staff training and potential consulting fees. For smaller insurers, these costs can be particularly burdensome. 2. Complexity of implementation. The standard is complex and may require considerable effort to interpret and implement correctly. This could lead to inconsistencies in application, particularly among smaller firms or those with less robust infrastructure. 3. Increased regulatory scrutiny. The detailed disclosures required by IFRS 17 could expose insurers to increased regulatory scrutiny and potential reputational risks. 4. Volatility in financial statements. The new measurement models might introduce volatility in reported profits due to changes in assumptions or market conditions, which can be challenging for investors and analysts. 5. Operational challenges. Insurers may face operational challenges as they adjust their accounting, risk management, and actuarial processes to comply with the new standard. This can also put additional strain on resources during the transition period. As if this was not enough, the industry is still expected to report its financials under multiple frameworks, such as margin of solvency and risk-based capital (RBC) frameworks. In the not-too-distant future, we would have to factor in the own risk and solvency assessment (ORSA) and environmental, social and governance (ESG) criteria. There is no doubt that these can provide a comprehensive view of an insurer's financial health, but there are several downsides and challenges associated with this approach: 1. Complexity and confusion. Multiple frameworks can lead to complex reporting processes that may confuse stakeholders, including regulators, investors and policyholders. Each framework has its own metrics, requirements, and calculations, which can make it difficult to provide a clear and consistent narrative about the insurer's financial position. 2. Increased costs. Maintaining compliance and preparing reports under multiple frameworks can lead to increased administrative costs. Insurers may need to invest in additional resources, including specialized staff, software and external consultants, which can strain operational budgets. 3. Regulatory overlap. There may be regulatory overlaps and conflicts between the various frameworks. For example, different frameworks might have conflicting capital requirements or solvency assessments that could create confusion for both the insurer and regulatory authorities. 4. Focus dilution. Insurers might divert attention and resources away from core business operations to focus on meeting the varying demands of multiple reporting frameworks. This could potentially hinder strategic decision-making and operational efficiency. 5. Inconsistency in risk assessment. Different frameworks may assess risks in varying ways, leading to inconsistencies in how an insurer's risk profile is portrayed. This can result in stakeholders misinterpreting the insurer's overall risk exposure and financial stability. 6. Data management challenges. Reporting under multiple frameworks requires robust data collection, management and analysis systems. Insurers may face challenges in gathering and maintaining the large quantities of data needed for consistent reporting across different regimes. 7. Market perception risks. If stakeholders perceive the insurer as engaged in overly complex or opaque reporting practices, it could affect their confidence and trust. Transparency is essential in the insurance industry, and any perception of obfuscation can harm reputational capital. 8. Evolving standards. Frameworks like ESG are still evolving, and their requirements can change over time. Insurers who are heavily invested in reporting under these frameworks may need to quickly adapt to new standards, which can add additional pressure and uncertainty. In summary, while reporting under multiple frameworks can offer a robust perspective of an insurer's financial standing and risk profile, it can also bring about complexities, increased costs, regulatory challenges, and potential impacts on stakeholder confidence. As such, insurers and, more importantly, the Insurance Commission need to carefully evaluate the benefits against these downsides when determining the reporting practices. The adoption of IFRS 17 presents both opportunities and challenges for the general insurance industry. While it promotes transparency and better performance measurement, insurers must navigate the complexities and costs associated with its implementation, especially in the Philippine setting, where new requirements are starting to be looked into and may be implemented sooner rather than later. In this regard, a well-planned transition strategy will be crucial for leveraging the benefits while mitigating the drawbacks of these significant changes. Source: manilatimes.net

Climate change and its impact on losses and claims featured highly as major challenges to be faced by marine insurers in the future, according to a general consensus reached at the 150th anniversary conference in Berlin of the International Union of Marine Insurance (IUMI). Changing weather patterns would place increased strain on supply chains causing delays and risk accumulations. Coupled with this were advances in technology including AI and cyber-risk. People would be encouraged to work smarter and it was thought likely that fewer people would be engaged in a wider range of activities. Enhanced regulatory obligations and global conventions were also thought to have a significant impact going forward. The views were gathered at a workshop on the future of marine underwriting which was part of the three-day conference. Opportunities Some of the challenges would create opportunities encouraging underwriters to innovate, invest in advanced technologies, become more proactive with loss control and develop more sophisticated risk assessment and management strategies. It was agreed that marine insurers had proven their ability to adapt but that more comprehensive risk management processes and better collaboration would be required going forward. “Digitisation and technological advancement are leading to the creation of new types of data within transportation domains. The insurance and reinsurance market can utilise this data in enhanced underwriting, new product creation, and more efficient claims processing”, said Mr Markus Spielmann, head of Marine at Munich Re, who was a member of the panel at the workshop. Increased engagement with regulators was also thought to be a good thing. In addition, to thrive into the future an optimum legal environment was required alongside solid government support and an adequate supply of relevant data to allow informed decision-making. The digitalisation of trade documents was also considered to be important. Changes in government policy would also create significant change. Using the offshore energy market as an example, Ms Melanie Raven, active underwriter with Ark Syndicate and chair of the IUMI Offshore Energy Committee said, “Significant growth will driven by society’s transition to clean energy sources.  As a consequence, insurance products will need to adapt, adjusting for the integration of new tech and unique risks associated with these technologies. Governments will be a driving force here and, in the UK, we’ve already experienced guidance for carbon capture, utilisation and storage (CCUS), for example”. Geopolitical tensions Geopolitical tensions were making the provision of cover more challenging in certain regions and this was said to be of growing concern in the future, possibly with the potential of making certain activities uninsurable. There was agreement that events with the potential of resulting in “gigantic loss aggregation” would be unlikely to be able to attract adequate cover – examples included radio-active or bio-active contamination or large-scale cyber warfare. Where sectors were in transition – the move from fossil fuels to renewables, for example – there was little or no historical data or experience on which to assess the likely risk. Whilst it was likely that these activities would remain insurable, it was thought that limited market capacity might create an issue going forward. Source: asiainsurancereview.com

Insurers are expanding into the family office space in Hong Kong and Singapore to target the needs of wealthy families in line with consumer demand, says global management consultancy McKinsey & Co. Insurers, together with banks, multi-family offices (MFOs), and WealthTechs, can serve the many family offices by using a framework focused on solutions, service, scalability, and security. Serving family offices has long been the domain of banks and MFOs according to an article published by McKinsey. Insurers are setting up teams to directly engage with family offices to provide highly customised solutions with a focus on estate planning. Challenge: Limited understanding of insurance products Despite the vast potential for bespoke insurance products that can help with wealth transfers and estate planning as well as multi-jurisdictional needs, Asia-Pacific’s family offices currently have limited engagement with insurers. Family offices may not realise the potential solutions insurers can offer. One reason for this is that single-family offices, often led by former bankers, are typically more comfortable formulating investment strategies than working with insurers on a comprehensive plan that includes wealth transfer and succession planning. Mr Karim Gilani, president of Greater China, Singapore, and international high net worth, at Sun Life, says that “there is a need for the industry to engage and educate families on the potential of insurance to enable families in their wealth transfer and preservation process, such as insurance policies covering multiple generations of beneficiaries across the globe, or policies providing liquidity during estate transfers”. Ms Wong Sze Keed, CEO of AIA Singapore, says that “providers need to go in with a more holistic approach, with a full suite of products to holistically serve families. For instance, insurers cannot just go in and pitch insurance solutions; they also need to collaborate with other professionals, such as tax advisers and legal advisers.” Potential solution Insurers can consider educating family offices about the benefits of insurance solutions beyond life coverage, which extends to succession planning. In addition, there is a clear need to collaborate. Insurers can build an ecosystem for value-added services including tax advisory, immigration support while serving families in multiple jurisdictions, legal support, and so forth. Core questions for insurers and other service providers include what can be built and offered in-house versus being outsourced and which provider will take the fiduciary responsibility for the customer relationship. Rather than the current fragmented delivery of services from multiple providers, family offices interviewed by McKinsey say they would like a one-stop shop that caters to their needs. Insurers Insurers are increasingly developing strategies to serve family offices, recognising the demand for tailored insurance solutions. They gain traction with bespoke policies underwritten on a case-by-case basis. For instance, an Asia–Pacific insurer recently underwrote a master policy for a family office with several individual beneficiaries, a highly bespoke process involving substantial premiums and large sums assured. Mr Harpreet Bindra, CEO of HSBC Life Singapore, said, "More work needs to be done to structure products that address specific needs, particularly from the perspective of sum assured across the family. Multijurisdiction and multigeneration nuances offer challenges and opportunities with sophisticated holding structures involved.” The fee structure for insurers typically involves high premiums for these highly customised policies. Insurers, meanwhile, can boost engagement with family offices by collaborating with other service providers to educate them about tailored insurance solutions. By investing resources and improving their distribution strategies—such as training existing teams, creating new channels with direct service teams for family offices, and partnering with banks (beyond brokers)—insurers can serve family offices more effectively.  A framework for serving Asia–Pacific’s family offices Insurers can also enhance family office solutions by leveraging their networks and partnerships, offering services beyond insurance such as tax and legal advisory as well as governance structuring. Insurers should also consider enhancing post-policy-issuance services, such as regular check-ins with families, white-glove services with a focus on educating the next generation, and perks such as fast-track access to top hospitals as part of a combined health and insurance infrastructure. Lastly, insurers could ensure their infrastructure is ready to serve family offices by improving risk models using data and analytics to minimise losses from large sums assured—an avenue for exclusive collaboration with reinsurers. Insurers, meanwhile, can expand into value-added services by focusing on wealth planning and succession advisory, while WealthTechs can use technology solutions to address pain points across the customer journey, complementing their investment expertise. Source: asiainsurancereview.com

We cordially invite you to the Global Asia Insurance Partnership (GAIP) Summit 2024 with the theme “Addressing Asia's Protection Gaps,” to be held on October 14-15, 2024, in Singapore. This event will bring together industry leaders, policymakers, and experts to discuss and develop strategies to tackle the significant protection gaps in Asia, which leave many communities and economies vulnerable to financial hardships from unforeseen risks like natural disasters and health emergencies. For more information, kindly visit: www.gaip.global

Motorcycle liability insurance premiums totalled VND431.8bn ($17.6m) in the first half of 2024, with claims amounting to nearly VND42bn, according to official statistics. This reflects an improved payout rate compared to previous years. Previously, the payout rate for motorcycle liability insurance was lower, at just 6% in 2019 and 2.5% in 2021, reported the Vietnam News Agency. Responding to the low claim payout rate, the authorities issued Decree No. 67/2023/ND-CP, effective from 6 September 2023, aimed at simplifying the claims process and improving insurance protection.  Decree No. 67 allows a maximum premium reduction of 15% for vehicles with low claims histories, encouraging safer driving. The maximum compensation was set at VND150m per accident, up from the previous VND70m-VND100m per person. In addition, the decree requires insurance companies to establish 24/7 hotlines for accident reports, guidance and inquiries, with calls recorded to ensure compliance. Insurers must provide claim filing instructions within one hour of notification and conduct damage assessments within 24 hours. Compensation for health and life damages must be advanced within three working days, even if the full claim amount is not yet determined. Additionally, the decree mandates the collection of necessary documentation from law enforcement in fatal cases and encourages the use of information technology in claims processing. Source: asiainsurancereview.com

The Financial Services Authority (OJK) believes that the Islamic insurance sector in Indonesia will consolidate in the next few years. Mr. Ogi Prastomiyono, chief executive of Insurance, Guarantee Institutions, and Pension Funds  Supervision at the OJK, said in a statement to the media that this scenario could be seen from the Shariah unit spin-off work plans (RKPUS) which have been submitted by 41 insurance companies that have takaful windows. Mr. Ogi said that based on the spin-off plans, 12 Shariah units will not continue operations but will transfer their portfolios to other companies instead. In his update on the progress on the spinning off of takaful windows by insurers, Mr Ogi said that as of August 2024, there were 29 Shariah units that would continue takaful operations. Among them, the plans are to establish new companies as follows: in 2024, two Shariah units will be transformed into takaful companies; in 2025 there will be 18, and in 2026 there will be nine. The OJK issued the regulation POJK 11 of 2023 to regulate the spinning-off of Shariah units of insurance and reinsurance companies. The current deadline for spinning off is 31 December 2026. Source: meinsurancereview.com

The  Best’s Commentary , “Typhoon Yagi Likely an Earnings Event for Vietnam’s Non-Life Insurers”, states that reinsurance programmes will mitigate the impact on rated non-life insurers’ underwriting performance, likely preventing capital events. Catastrophe excess of loss reinsurance programmes generally have low attachment points, effectively transferring losses to reinsurers. At the same time, insured losses are expected to be much lower than economic losses given the low insurance penetration rate in Vietnam. “Rated companies actively manage their geographic accumulations and have been consistently profitable,” said Mr Chris Lim, associate director at AM Best. “However, the impact on underwriting performance may be more significant this time, as more stringent reinsurance terms and conditions are likely to result in higher net retained losses for cedents.” Typhoon Yagi made landfall on 7 September 2024, causing widespread damage to northern parts of the country; in particular, in Hai Phong, which is home to industrial parks that host factories of major multinational and domestic companies, and in coastal regions near Hanoi. Apart from property damage to buildings and infrastructure, equipment and inventory were also destroyed. Additional insurance losses are expected from the motor and marine lines as well. The full extent of business interruption losses is still being assessed, but AM Best expects the impact to be manageable given the limited take-up of business interruption coverage. Economic losses of over $1.6bn Vietnam’s Minister of Planning and Investment Nguyen Chi Dung said at a government meeting yesterday that Yagi caused damages totalling VND40tn ($1.63bn) in northern localities and might reduce Vietnam’s 2024 GDP by 0.15 percentage points. The death toll from the typhoon has exceeded 250 with many people still missing. Southeast Asia Human and material losses due to Typhoon Yagi, which impacted Southeast Asia between 1 and 8 September, have increased rapidly in recent days, said Aon in its “Weekly CAT Report” dated 13 September. The Philippines, southern China, and northern Vietnam were among the hardest hit. The death toll has exceeded 370 fatalities and total economic losses are likely to reach billions of US dollars, with the majority of losses originating from China’s Hainan Province. Source: asiainsurancereview.com