Looking forward to having you on our February meet up and get together this coming February 28, 3 PM - 5 PM at The Astbury, Makati Highlights include: 1. A panel on Future of Insuretech featuring the leadership of Philippine Life Insurance Association, Inc. and Philippine Insurers and Reinsurers Association 2. Launch of the Insuretech HACKTAHON for Fintech Philippines Association in partnership with Alibaba and Digital Pilipinas 3. Our partnership with His Majesty’s Government / UK Embassy in Manila for the SEA Tech Week and London Tech Week The world is really opening up for Filipino Fintechs and Technologists and Fintech Philippines Association is your gateway to the world. Request for your exclusive invite here https://tinyurl.com/fphfeb28

From left to right: Mr. Wong Onn Chee, Chief Executive Officer (Rajah & Tann Cybersecurity) Mr. Eng Teng Wong, President & CEO (Pru Life UK) A/Prof &Atty. Lanx Goh, Global Privacy Head (Prudential) Mr. Raul G. Tumangday (NatRe) Mr. Leandro Angelo Y. Aguirre, NPC Deputy Commissioner Atty. Ma. Patricia E. Foria, Chairperson of PIRA DPC and Compliance Committee (Insurance Co. of North America - A Chubb Co.) Mr. Argene A. Aguilar (Paramount Life & General) Atty. Lawrence Mari C. Santella (Pacific Cross)

The Philippines' adoption of Own Risk and Solvency Assessment (ORSA) standards is a positive development that will elevate the country's regulations to a higher standard, one more in line with more advanced regimes, says AM Best. On 25 August 2022, the Insurance Commission issued a circular requiring life insurance companies, non-life insurance companies, and reinsurers to adopt their own risk and solvency assessment (ORSA) framework. This framework is in line with enterprise risk management (ERM) for solvency purposes to manage insurers' risks in an integrated manner. ORSA builds on the risk-based capital framework introduced in 2020. It requires that insurance companies identify all material risks and risk correlations, quantify these risks and estimate capital requirements through risk modelling and stress testing. In a new Best’s Commentary, “Philippines Insurers Adoption of ORSA Standards a Credit Positive,” AM Best states that by adopting ORSA, the Philippines insurance industry will be more aligned with markets such as the European Union, the UK, Australia, Singapore, Hong Kong, the US, Bermuda, and Japan. “Formal establishment of an enterprise risk management (ERM) framework will aid in solvency by identifying, measuring, and managing risk in an ongoing and integrated manner,” said Mr. Jason Hopper, associate director, industry research and analytics, AM Best. “Insurance company managements will need to articulate to regulators how risk appetite, limits and capital requirements are consistent with their models and stress testing results. Insurers will also be required to implement procedures to monitor risk levels and adhere to limits.” According to the commentary, just a minority of non-life companies—13 of 57 based on 2021 premiums—will meet the premium threshold set by the regulator for required implementation. What remains to be seen is how many companies that do not meet the threshold opt to implement ORSA. AM Best views the management of an organization's exposure to potential earnings and capital volatility, and the maximization of value to the organization’s stakeholders, as the fundamental objectives of the organization's ERM programme. Additionally, given the region’s exposure to natural catastrophes, stress testing will make the industry more resilient due to enhanced capital requirements and reinsurance partnerships. (Re)insurers, that meet the annual premium threshold that makes it mandatory for them to implement ORSA, are required to submit their respective ORSA reports covering the 2023 financial year on or before the fourth quarter of 2024. For entities who meet the criteria for mandatory ORSA after FY2023, their respective ORSA reports shall be submitted no later than the fourth quarter following the subject financial year. Source: asiainsurancereview.com

Germany's global insurer Allianz has announced that its total operating profit in Asia increased by 17% to EUR674m ($720m) in 2022. In Asia, Life & Health operating profit climbed by 20% to EUR532m while Property & Casualty operating profit rose by 8% to EUR141m, with total revenues jumping by 17% to EUR1.7bn. In comparison, for Allianz globally, operating profit rose by 5.7% to EUR14.2bn in 2022, driven by strong performance in the Property-Casualty and Life/Health business segments. Life & Health operating profit grew by 5.4% to EUR5.3bn while Property & Casualty operating profit rose by 8.4% to EUR6.2bn, with total revenues jumping by 17% to EUR1.7bn. Total global revenue grew by 2.8% to EUR152.7bn in 2022. Ms Anusha Thavarajah, Regional CEO, Allianz Asia Pacific, said, " “Allianz Asia Pacific’s strategy to focus on distribution and customers through delivering the best in digital, products, and services has resulted in a strong and resilient performance amid difficult market conditions. She added, “Asia as a region has always been synonymous with boundless promise, potential, and opportunity. As the outlook for the region improves, the shift in market dynamics and changing consumer behaviours impact the way the Asian consumer demands insurance." Source: asiainsurancereview.com

Finance Secretary Benjamin Diokno asked the Insurance Commission to explore new initiatives to promote trust and transparency in financial products and encourage the public to invest in financial protection. “I expect the officials of the Insurance Commission to continue exploring new initiatives to properly perform its mandate which is to protect the financial consumers of the insurance, pre-need and HMO industries”, Diokno said during the IC’s 74th anniversary on Feb. 17 at the Philippine International Convention Center. Diokno urged the commission to issue the implementing rules and regulations of the Financial Consumer Protection Act to increase the consuming public’s trust in the insurance, pre-need and health maintenance organization industries by equipping all relevant government institutions and financial regulators with the legal authority to enforce prudent, responsible and customer-centric standards of business conduct. He also called for the regular review and assessment of pertinent statutory provisions and IC-issued implementing rules and guidelines so that operations are at par with international standards and globally accepted best practices. Diokno reminded the commission to remain vigilant and ensure the fairness of premiums collected. “These products involve computations that are not readily clear to the public. It is our responsibility to ensure that products sold to our consumers are fair and truly protect them,” he said. Diokno also encouraged the commission to implement digital transformation initiatives that make financial products transparent and accessible to the consuming public to achieve greater financial inclusion in the country. The Philippine insurance sector managed to thrive despite the global health emergency that threatened the economy. Data showed that in the third quarter of 2022, the HMO industry’s total assets grew 8.6 percent year-on-year to P56 billion. Total revenues and total capital stock also increased in the third quarter by 8.5 percent and 44.6 percent, respectively. The delivery of healthcare benefits and claims by HMOs went up 35.9 percent as of end-September 2022 to P31.93 billion. “These accomplishments attest to the industry’s resilience under the Commission. The Marcos administration envisions a society that is prosperous, resilient, and fair. This requires trust and transparency,” Diokno said. Source: manilastandard.net

Global reinsurance giant Swiss Re has reported a net income of $472m for 2022, with a net income of $757m in the fourth quarter. For 2023, the Group targets a net income of more than $3bn, supported by successful P&C Re renewals, an expected decline in COVID-19 claims, higher interest rates and cost discipline, the reinsurer says in a statement. Swiss Re's group CEO Christian Mumenthaler said, "2022 was a challenging year, marked by the war in Ukraine, surging inflation, the tail end of the COVID-19 pandemic and elevated natural catastrophe losses. We have focused on addressing these challenges proactively, all while maintaining our very strong capital position. This has enabled us to take advantage of attractive market conditions at the January renewals, while continuing our commitment to the ordinary dividend." Swiss Re's group CFO John Dacey said, "Throughout the year, Swiss Re took measures to add $1.1bn in reserves to address the risk of higher claims due to economic inflation across our property and casualty businesses. Higher interest rates are already helping to compensate for this impact, with the contribution from our fixed-income portfolio rising by $170m in the fourth quarter compared with the prior-year period. After absorbing a significant impact from COVID-19 in the early part of 2022, L&H Re has returned to attractive levels of profitability. Corporate Solutions continued to deliver resilient results and outperformed its full-year target. We are pleased to end the year with a solid fourth-quarter result that was driven by strong operational performance from our main businesses." Solid fourth-quarter performance supports group result Swiss Re reported a net income of $472m and a return on equity (ROE) of 2.6% for the full-year 2022, supported by a net income of $757m in the fourth quarter. This compares with a net income of $1.4bn and an ROE of 5.7% for 2021. The decline was driven by the impact of economic inflation on actual and expected claims in the property and casualty businesses, mark-to-market impacts on listed equity investments and large natural catastrophe claims above expectations. Net premiums earned and fee income for the Group rose 0.9% to $43.1bn in 2022 compared with the previous year. Growth was negatively affected by adverse foreign exchange developments, while at stable foreign exchange rates, the increase amounted to 5.3%. Very strong capital position and rising recurring investment income Swiss Re's ROI decreased to 2.0% from 3.2%, impacted by the decline in global equity markets and the associated mark-to-market adjustments. The recurring income yield increased to 2.6% for 2022 from 2.2% for 2021, benefitting from targeted reinvestments in the rising interest rate environment. In the fourth quarter, the recurring income yield rose to 3.0%, while the fixed income reinvestment yield reached 5.1%. Swiss Re's capital position remained very strong, with the Group Swiss Solvency Test (SST) ratio above the 200–250% target range as of 1 January 2023. A summary of Swiss Re's 2022 financial performance is as follows: Property & Casualty Reinsurance (P&C Re) showed net income of $312m; combined ratio of 102.4% for 2022; Life & Health Reinsurance (L&H Re) posted net income of $416m; Corporate Solutions produced a net income of $486m; combined ratio of 93.1% Return on investments (ROI) stood at 2.0%, reflecting the decline in global equity markets P&C Re increased premium volume by 13% in the January 2023 renewals and achieved price increases of 18% Solvency Test ratio exceeded the 200–250% target range as of 1 January 2023 Board of directors to propose a dividend of $6.40 per share at the Annual General Meeting on 12 April 2023. Financial targets and outlook For 2023, the Group targets a net income of more than $3bn, supported by attractive market conditions, an expected decline in COVID-19 claims, higher interest rates and cost discipline. Swiss Re aims to maintain its very strong capitalization in 2023, with a Group SST ratio materially above the target range, given the level of geopolitical and macroeconomic uncertainty. The Group also confirms its multi-year targets of 10% annual growth in economic net worth per share and 14% return on equity in 2024. P&C Re will move away from its normalization approach to target a reported combined ratio of less than 95% for 2023; L&H Re will aim for a net income of approximately $900m; and Corporate Solutions will target a reported combined ratio of less than 94%. Swiss Re's group CEO Christian Mumenthaler said, "2023 has started well, with successful January renewals reflecting our ambition to drive profitability and create value for shareholders, while continuing to support clients. Our investment portfolio is well-positioned to benefit from rising interest rates, and we do not expect a return of high COVID-19 claims that we had seen over the past years. Despite the uncertain macroeconomic environment, we are confident in the group's ability to deliver on the new ambitious targets." Source: asiainsurancereview.com

With APAC's exposure to extreme weather events leading to unsustainable natural hazard losses and high inflation worsening them, reinsurers in the region will face challenges in their growth in 2023. According to GlobalData’s insight report, ‘Reinsurance Market Size and Trends Analysis by Region, Business Lines, Top Markets, Regulatory Overview and Competitive Landscape, 2021-2026’ reveals that APAC’s reinsurance sector is set to grow at a compound annual growth rate of 7.6% from $171.4bn in 2021 to $246.8bn in 2026 in terms of ceded premiums. APAC’s top five reinsurance markets in terms of ceded premiums are – Japan, China, Australia, Hong Kong and South Korea. In 2021 these five collectively held 84% share of APAC’s market. GlobalData senior insurance analyst Deblina Mitra said, “Increase in cost of claims due to the high inflation is adding pressure on reinsurers’ profitability. To reduce this, reinsurers are limiting coverage on loss-making lines, raising premiums and pushing for higher deductibles by insurers. Ms. Mitra said, “This in turn will prompt insurers to increase premium prices and retention levels to make a reserve for higher deductibles. Australian insurer IAG, in its January 2023 renewal of catastrophe reinsurance programs increased retention by 75% compared to July 2022.” Aviation, marine, cyber, political violence and trade credit insurance lines are anticipated to remain vulnerable to the ongoing Russia-Ukraine war losses in 2023. Insurers in the APAC region are also struggling to find suitable coverage for war risks for shipment of goods and natural gas supplies around the conflict zone as traditional reinsurers are exiting this line of business. Ms. Mitra said, “Regulatory developments across the APAC region would, however, have positive impact on reinsurance growth over the coming years.” Reinsurance in Japan will benefit from the planned implementation of higher capital standards for insurers in 2025. Japan accounted for 35.2% of Asia’s ceded premiums in 2021 and is forecast to grow at a CAGR of 4.1% over 2021-26. In China, reinsurers will benefit from the new regulation on reduced entry barriers. The regulation gives preferential treatment to foreign reinsurers if their solvency regulatory system is recognized in China. China held a 25.6% share of the APAC’s ceded premiums in 2021 Ms. Mitra said, “In 2023, reinsurers in APAC will focus on risk management and limit their loss exposure due to the ongoing Russia Ukraine conflict and high inflation. The long-term growth, however, will remain stable due to favourable regulatory developments.” Source: asiainsurancereview.com

Companies in India have digitalized nearly all interfaces that connect with customers, but this reduction of physical effort has now hit a point of diminishing returns according to a new survey. The survey conducted by Terragni Consulting reveals that the Indian customers are now becoming increasingly intolerant of the ‘going digital’ efforts and with the ever-increasing options available. The company found that customer support is becoming difficult for customers in banking, insurance, retail and e-commerce, leading to stress. Lack of human support, multiple follow-ups on the status and the need for multiple iterations are putting them off. The insurance and e-commerce industry scored poorly with a greater degree of difficulty, while retail and banking too were ranked as difficult. According to the study it was in the insurance industry that the time taken to complete transactions and get the desired outcomes was the most significant source of friction with the number of follow-ups increasing compared with the pre-pandemic level. The study found that Indian customers will turn away from a brand they perceive to be ‘effortful’. The consumer no longer just wants digital, they want more human interactions. Terragni Consulting director Anil Pillai said, “Lack of empathy is a huge problem across all Indian brands. This is coming out strongly in our study. After the pandemic, customers have significantly lower temporal tolerance and even small delays impact how customers perceive the brand.” Mr. Pillai said the ease of doing business in India is not just about starting a business or running a business but also about how easy it is for the consumer to do business with the company without friction. Simplicity should be the focal point in 2023-24 for the companies. The countrywide study covering 2,500 consumers between October and December 2022 found that companies would have to eliminate cognitive stress by incorporating high visibility of outcomes for the customers. The companies would have to design for failure and accept that they will fail so a well-designed service recovery that focuses on assurance and stress transference is a vital opportunity for driving ease and differentiation. Source: asiainsurancereview.com

Insured losses from the recent extreme weather events in New Zealand would exceed the comparable losses for all of 2022 which was already a record year for insured losses from extreme weather, says the Insurance Council of New Zealand (ICNZ). Total economic losses from recent climate events involving storms and massive flooding will run into billions of dollars. Need to build back better New Zealand must build back better from the catastrophic extreme weather events of the past two weeks, says the ICNZ. “Repairing and rebuilding property and infrastructure in high-risk areas to the same specifications as in the past will only lead to a repeat of the dreadful consequences we have all seen. Indeed, it could be worse with more extreme and frequent weather events as a result of climate change,” ICNZ chief executive Tim Grafton said. “Now is the moment to reset and ask questions about whether to rebuild in some locations and if we do how to rebuild better to better protect ourselves.” “Most communities have infrastructure built decades ago that may have been fit for the hazards of the time, but are now demonstrably inadequate. Massive and sustained investment is required to address that.” But every dollar invested in risk reduction will save many more dollars in future economic costs, keep people safer and reduce the stress, trauma, and loss to the community from similar events in the future. Clear line required “Future development needs to take a long view – houses are built to last 50 years or more. It is time to draw a very clear line in the sand and not consent to build in dumb places and in a way that can’t cope with what’s to come.” ICNZ spoke yesterday before Parliament’s Environment Select Committee considering the Natural and Built Environment Bill which, amongst other matters, contains draft provisions to reduce risks from natural hazards as a condition of rebuilding after a disaster. This proposed legislation does not fully come into effect for several years. ICNZ said, "The question that should be asked now is whether we can afford to wait till this Bill and accompanying legislation to replace the RMA, the Spatial Planning and Climate Change Adaptation Bills, take effect." Source: asiainsurancereview.com

Pru Life UK, a leading life insurer in the Philippines, has released a policy paper titled "InsurTech: Driving Broader Insurance Access," giving a better understanding of how InsurTech, such as online shopping platforms, can be used to broaden Filipinos' access to life and health protection products. Authored by the law firm Romulo Mabanta Buenaventura Sayoc & de los Angeles, the policy paper reviews the current regulatory framework for online insurance sales and looks at how online shopping platforms can serve as insurance intermediaries. “The full potential of online shopping platforms has up to now not yet been maximized, likely because online shopping platforms are not insurance-specific. As InsurTech evolves the way of doing the insurance business, insurers need to keep up,” said Ms. Cynthia Del Castillo, senior partner and head of the Capital Markets Practice at Romulo Mabanta Buenaventura Sayoc & de los Angeles. A key recommendation of the paper is for the Insurance Commission to consider allowing online shopping platforms, including electronic wallets that serve as e-commerce platforms, to act as an “intermediary” for the sale and distribution of insurance products, including investment-linked insurance products, under a three-tiered classification of intermediaries as follows: Those that provide advice and client servicing such as insurance agents and brokers; Those that provide advice but not client servicing, but require a degree of knowledge of insurance products such as online insurance aggregators; and Those that merely provide a platform that connects the insurer and the consumer for online distribution of insurance products, and do not provide advice and/or client servicing such as online shopping platforms, online marketplaces and e-wallets. Pru Life UK president and CEO Mr. Eng Teng Wong said, “Digitalization has accelerated almost every aspect of our lives. However, the insurance penetration in the Philippines as a percentage of the national Gross Domestic Product (GDP) is less than 2%. This is amongst the lowest in Asia. By harnessing the combined strengths of the financial advisor workforce and the power of mobile and online apps and platforms, we can quickly broaden the reach and accessibility to many more affordable life and health insurance solutions, including investment-linked plans.” Mr. Wong is also FinTech Alliance Philippines’ Insurtech Committee chairman leading the organization's role in engaging, building, and expanding a sustainable digital finance ecosystem. Source: asiainsurancereview.com