The ASEAN School for Young Insurance Managers (AYIM) is an initiative by the ASEAN Insurance Education Committee aimed at nurturing promising young insurance managers from ASEAN countries. This program is crafted to transform these high-potential individuals into well-rounded leaders who possess a comprehensive understanding of management basics and a wide-ranging market perspective. It prepares them to take on the multifaceted roles required to leaders within their companies and the broader industry. Download the eBrochure. For more information, you may visit: www.scicollege.org.sg/AYIM2024

This year, insurers are facing a crisis where they may have to pay hundreds of billions of won more in corporate taxes compared to the previous year due to the adoption of the new accounting standard, IFRS 17, which has been in place for just two years. Since the introduction of IFRS 17, the amount of cash surrender reserves recognized as expenses has surged annually by trillions of won. As a result, there are discussions about lowering the reserve accumulation amount compared to the current level. While cash surrender reserves are originally excluded from taxation as they represent liabilities that must be returned to policyholders upon contract termination, the sudden increase in reserve size has prompted calls for regulatory improvements. According to the insurance industry on May 2, the National Tax Service began investigating the reasons why corporate tax revenues did not increase despite insurers recording their highest-ever net profits after the introduction of IFRS 17. In the first year of implementing IFRS 17 last year, insurers accumulated a net profit of 13 trillion won. One of the reasons cited for the lack of tax revenue growth compared to net profits is the significant increase in cash surrender reserves last year. Cash surrender reserves are funds set aside to refund policyholders in the event of contract termination, as required by commercial law to protect policyholders. Historically, they were not subject to taxation as they were categorized as liabilities, reflecting the obligation to repay policyholders at some point in the future. However, the situation has become more complex with the adoption of IFRS 17, which assesses liabilities at market value. This is because the reserves calculated under the new accounting standard have decreased compared to those under the previous accounting standard, IFRS 4. To address potential shortages in funds for future repayments to policyholders, financial authorities have instructed that the difference between the amounts calculated under IFRS 17 and IFRS 4 should be accumulated below the accumulated earnings of the capital item, specifically earmarked for cash surrender reserves. This measure aims to ensure compliance with the new accounting standards while fulfilling the legal obligation to protect policyholders under commercial law. Additionally, tax authorities revised tax laws in 2022 to exclude these reserves from taxation. However, the cash surrender reserves included as deductible expenses under tax laws snowballed last year. Annual increases of over 1 trillion won per insurance company are notable. By life insurance company, Shinhan Life exceeded 3 trillion won, with 3.45 trillion won as of the end of last year, followed by Hanwha Life with 2.5 trillion won and NH Nonghyup Life with 1.95 trillion won. In the non-life insurance sector, Hyundai Marine & Fire Insurance recorded the highest amount at 3.42 trillion won, followed by KB Insurance with 2.79 trillion won, DB Insurance with 2.65 trillion won, and Samsung Fire & Marine Insurance with 1.18 trillion won. If a corporate tax rate of 26.5 percent was applied to the cash surrender reserves, insurers would potentially owe hundreds of billions of won more in taxes this year, based on the current accounting year. However, direct taxation is difficult without amending the law, given that the reserves were recognized as expenses under tax laws in 2022. Instead of amending the law, there is practical discussion within financial authorities about revising supervisory regulations to lower the accumulation rate of cash surrender reserves. Lowering the accumulation rate would reduce the reserves but increase taxable income under tax laws, thereby enabling tax revenue to be secured. The controversy is expected to persist. As insurers face a sharp increase in corporate tax burdens, there is concern that the fundamental principle of protecting policyholders under commercial law could be significantly undermined. When IFRS 17 was introduced, cash surrender reserves were not only excluded from taxation but also excluded from distributable profits by financial authorities, all in the interest of policyholder protection. In response, the insurance industry has mobilized task forces (TFs) to devise strategies to address these challenges. Source: businesskorea.co.kr

Thailand's insurance regulator, the Office of Insurance Commission (OIC), has launched an insurance database system (IBS) in collaboration with the Thai General Insurance Association and general insurance companies. The database can be accessed by the entire government sector. Insurance sector and the public. The data available therein would be put to practical use concretely, bringing benefits to both the government sector. Insurance sector and the public. Mr Chuchat Pramunphon, secretary-general of the OIC, says that the data available in the IBS can be used for: statistical analysis by the government, the insurance industry, and research institutions actuarial analysis to support the determination of appropriate premium rates for various insurance plans designing good and efficient services. in-depth analysis to support the development and expansion of the general insurance business. The non-life IBS is also expected to improve transparency, build public trust, and support new forms of risks. Source: asiainsurancereview.com

International reinsurers are starting to categorise the Middle East as a Nat CAT hot spot, given the increased frequency of natural hazards in the region in recent years, according to Apex-Egypt Reinsurance Brokerage managing director Khaled El-Sayed. Nat CAT events in places like Oman, the UAE and Saudi Arabia have led to a change in reinsurers’ views of the region, reported Al Mal News citing Mr El-Sayed. He said that reinsurers have started to revise limits on the coverage of natural perils in riders on fire insurance policies. In another development, some reinsurers have asked insurers in Egypt to set a separate premium for natural disaster insurance coverage. Mr El-Sayed said that the reinsurers’ actions have attracted attention as deliberations are taking place on the pricing of fire risk. Disaster coverage is added in riders on fire insurance policies. He expected that these external pressures would lead the local market to establish an insurance pool against natural hazards, with members sharing the premiums and payouts. Mr El-Sayed also called for services from CAT modelling companies, to help the government and insurance companies predict these risks and prepare for them. Other industry players are urging the government to make Nat CAT insurance coverage mandatory in Egypt. The country currently does not have a national reinsurer. In 2007, the then national reinsurer Egypt Re was liquidated. In recent years, major disasters that have occurred in the region included destructive floods in countries like Oman and the UAE, and earthquakes in Morocco and Turkiye. The 6 February 2023 Kahramanmaras earthquake is listed by several reinsurers as the biggest loss-making single event for the year. The disaster cost losses of around $6bn for the global insurance industry. Source: meinsurancereview.com

Over the medium to long term, substantial growth in the property and casualty reinsurance in the APAC region continues to be anticipated, says Hannover Re in its outlook on the sector. In its 2023 annual report, the global reinsurer says that consolidation is expected in the P&C reinsurance market in the short term, coupled with a greater focus on profitability, As far as the pandemic-related losses in accident and health insurance are concerned, Hannover Re says that it does not expect to incur any further strains in 2024. The reinsurer is seeing a clear tendency towards improved profitability in the market due to corresponding pressure exerted by capital providers, regulators and market players. Commenting on different geographical markets, Hannover Re said, “It is our expectation that the Chinese insurance industry, in particular, will improve considerably over the coming three to five years. The major reinsurers have recalibrated their risk models and hence their risk assessment and exposures for the coverage of typhoon risks in Japan in recent years. The increase in prices for industrial and fire business already recorded in the year just ended looks set to continue. “It is our expectation that rates and conditions for business in Australia and New Zealand will continue to stabilize on a high level – on both the insurance and reinsurance markets – following the severe natural catastrophe losses of recent years.” Source; asiainsurancereview.com

The Insurance Commission (IC) and the Integrated Bar of the Philippines (IBP), the national organisation of lawyers, have signed an agreement to provide free legal assistance to the insuring public. The agreement will provide free legal assistance, including consultation, and representation during mediation, conciliation, and adjudication proceedings, particularly to marginalised and less privileged citizens of the country, says the IC in a statement. Policyholders may need legal assistance when filing a claim or lodging a complaint arising from insurance, pre-need, and health maintenance organisation (HMO) products. As a standard procedure, IC informs the insuring public who file requests for assistance and/or complaints against insurance, pre-need, and HMO companies of the available legal remedies to enforce their claims. Under the agreement, after IC has informed a complainant of the available legal remedies, IC may endorse the complainant to the IBP for free legal services. IBP shall then provide legal services, subject to the application of a means and merit test and the availability of volunteer legal aid lawyers. The agreement, however, does not preclude the filing of requests for assistance and formal adjudication cases even without a lawyer, as IC standard procedures already provide for the filing of requests and complaints even without the assistance of counsel. In 2023, IC resolved all 5,417 informal complaints received from the insuring public, through amicable settlement between the complainants and the corresponding IC-regulated entities, or endorsement of the complaints for formal adjudication. Source: asiainsurancereview.com

Atty. Caesar Francisco OIC Office for Competition with PIRAs Atty. Pat Foria and Executive Director Mitch Rellosa at the DOJs Consultation Workshop on Competition a two-day event on 8-9 May 2024. The Sectoral Consultative Workshop aims to bring together government and law enforcement officials, legal professionals, members of the academe and key stakeholders to promote principles of competition and capacitate prosecutors and investigators in handling criminal violations of the Philippine Competition Act.

The Philippine Insurers and Reinsurers Association, Inc. is sad to announce the passing of Mr. Reynaldo A. De Dios last Sunday May 05, 2024. In his honor, the Philippine Insurers and Reinsurers Association, Inc., in collaboration with the Philippine Life Insurance Association, Inc., and the Insurance Institute for Asia and the Pacific Inc., has organized a celebration of Ronnie’s life and legacy with a Mass at 6:00 p.m. on Thursday May 9, 2024 to be followed by a short Memorial Service and a merienda cena immediately after. As Ronnie had numerous friends, colleagues and acquaintances through his long and fruitful life, the family has allocated this time for the insurance industry to be able to bid him farewell. In this respect, we hope to see you there. A short article on Ronnie can be accessed here.

Microinsurance premium contributions grew by 17.35% to PHP13.54bn ($237m) in 2023, according to data released by the Insurance Commission. The surge in microinsurance premium income could be attributed to the across-the-board increase in premium collection by MBAs (mutual benefit associations), and life and non-life insurance companies, says the industry regulator in a statement. MBAs dominated the microinsurance industry in premium collection with a total of PHP7.48bn or 55.26% of the entire market. As of the end of 2023, the number of lives insured under microinsurance policies reached 56.62m. MBAs covered 28.6m lives or more than half (50.5%) of the total number of lives with microinsurance policies. Premium collections by sector in 2023 are summarised as follows: Source: asiainsurancereview.com

By Michael F. Rellosa The Philippine nonlife insurance industry since the early days has recognized the value of collaborating and sharing information to further its objectives and advocacies. This becomes even more important today, as the world finds itself totally intertwined as it faces common threats, common perils and a shared future where collaboration is needed to address these risks. Bringing to mind the Thai floods that inundated factories and warehouses of the automotive industry, where the supply chain of motor vehicles across the region and even the world was disrupted and not able to recover for at least a couple of years. Another example would be the ongoing war between Russia and Ukraine, and how it similarly disrupted the wheat trade and raised the prices of bread around the world. The worrying geopolitical developments in many parts of the world and the weaponization of the internet both for propaganda and cybercrime, and indeed, cyber warfare. Look at the devastating heat wave that is currently blistering Asia from India all the way to Southeast Asia, including the Philippines, and the damage it is causing to crops, the health of the workforce, shortened work and school hours, to name a few. Call to mind climate change and the exacerbation of natural catastrophic events such as flooding (the Middle East and even the United States). We are beset with all these perils, and risks both natural and man-made which is pushing us to the tipping point. All these cannot be addressed singly. Only a collaborative effort, between the private and the public sectors, between industries, between regions and provinces, across borders and countries, and political divides. We don't, then we die. The insurance industry recognizes this and has made itself available for collaborative efforts to provide solutions to areas where it can or possibly can. Insurance industry stakeholders, through its association PIRA, have worked with institutions around the world to look into nature-based solutions, ecosystem adaptation and other novel ways of mitigating NatCat events or the damage that it causes. Again, the industry is working with the government to find ways and means for Philippine insurers to be able to lend their capacity to protect the agriculture industry. We are finding new ways to further microinsurance that is designed to widen the reach and protect the underserved portion of the population. We are in conversation with technological experts to see how we can improve our reach, our administrative efficiencies, our underwriting and claims processes, and the way we serve our insured. All these would not be possible if we kept to ourselves and not reach out and dialogue among ourselves and beyond with other stakeholders. This then brings me to a couple of opportunities for the industry and the various stakeholders to dialogue and learn from each other. First up would be the Philippine Insurance Summit, a conference organized jointly by the Insurance Institute for Asia and the Pacific, and the Philippine Insurers and Reinsurers Association (PIRA). It carries the theme "Navigating the Future; Trends, Technology and Transformation in the Rapidly Evolving Landscape of Insurance." This will be held at the New World Hotel on May 30, 2024, where industry players, brokers, clients, reinsurers will be gathered to discuss new technological developments and how these can be harnessed for the good of all. The second major event will be the 30th East Asian Insurance Congress (EAIC) to be held at the Hong Kong Convention Center on Sept. 24-27, 2024. The EAIC is one of the pioneer insurance conferences in Asia founded by insurance executives from Japan and the Philippines, then later joined by insurance practitioners from over 17 countries across Asia. The EAIC was founded in 1962 with the aim of furthering and developing international collaboration in the field of insurance of every sort. As you can see, collaboration in the industry was recognized as essential 62 years ago, and today with all that we face as an industry, as a country and as mankind, collaboration is the only way to go. We hope to see you at these events and together let us find a way to address and prepare for our future. Source: manilatimes.net