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Asia Pacific Region: World Largest Insurance Growth Market
The Asia Pacific region will become the biggest driver of insurance premium growth in the world by 2020 according to a recent industry research study. Approximately $1.3 trillion in premium volume will be generated in the Asia Pacific region between 2013 and 2020; almost half of the premium generated worldwide. Insurance plays an important role in any risk management program. In these emerging insurance markets, it is essential that effective risk management strategies are identified and applied early in the development stages.
China, India and Indonesia
It is estimated that insurance premium will grow by an average of 12% a year in emerging Asian economies. China, India and Indonesia will be the top three growth countries in property and casualty, marine and professional insurance coverage. Average growth rates in other emerging Asian economies, such as Vietnam, the Philippines, Malaysia and Thailand are estimated to be between 8% and 13%. Since 1980 approximately 40% of all global natural catastrophes took place in Asia, representing 45% of economic losses but only 18% of insured losses.
Construction, Energy and Infrastructure
The property and causality, professional and marine lines of business will be driven predominately by construction, energy, oil and gas and infrastructure projects such as highways, roads, bridges, water, wastewater along with real estate and other commercial and business projects throughout the region.
Malaysia
Based on recent regulatory changes, Malaysia has become an attractive target for expansion of conventional insurance businesses. Projections put growth to be at least 12% across the Malaysian insurance industry.
Thailand
The insurance industry in Thailand continues to demonstrate strong growth with Thailand's Office of Insurance Commission reporting that insurance business in the first quarter grew by 13.5% on previous years figures. The Thailand government is committed to promoting economic stimulation by implementing financial stimulus schemes, increasing exports and developing industrial activity.
Vietnam
Vietnam's economy is one of the fastest growing in Asia. Amendments to the Law on Insurance Business recently came into effect in 2011, aligning the legislation with international practices. Economic growth and a conducive regulatory environment are likely to spur further growth in the country.
Indonesia
Indonesia is the fourth most populous country in the world, after China, India and the USA. The country has been relatively untouched by the economic downturn and its government has been seen as instituting steady reforms to the financial services industry. These factors point to a potential market ripe for expansion. Foreign investors remain cautious in the face of high unemployment levels, and other risk factors including terrorism and institutional transparency.
Risk Management & Insurance
Effective risk management programs are essential for overall performance, profitability and risk mitigation. Risk management can also reduces the cost of insurance. It is also important to remember that insurance is a safety net when things go wrong - not something to rely upon for managing risk for your company or project. The goal is to implement methods for mitigating risk and avoiding losses and insurance claims - having to use your insurance coverage’s. The best method for achieving those results is implementing an effective risk management program.
Risk management is expressed in a plan - one that is sequential and goal-oriented. The first step is setting plan objectives with three fundamental goals.
- Reduce the chance of losses. Losses can be defined as an “unintended decline in, or reduction of value or money arising from a contingency or incident.” Obviously a loss has to be unintentional, or it would be fraud. You or your company would pay for such a loss.
- Reduce the chance of claims. A Claim can de defined as “any demand received by an Insured seeking damages and alleging liability or responsibility on the part of an Insured or persons for whose conduct the Insured is legally liable.” The insurance carrier would pay a claim after the deductible or self-insured retention (SIR) has been applied for covered losses of a insurance policy.
- The third and most important goal of your risk management plan. What steps will be taken to achieve goals 1 & 2 - reduce the chances of losses and claims? It is important to remember - it is not the insurance carriers responsibility to help you reduce claims and losses. It is your responsibility. After all, it is your business, project and money.
Conclusion
There will be significant growth opportunities for insurance in the emerging Asian economies. Risk management efforts will play an important role in the success and profitable growth of those programs. Risk management steps should include identifying, classifying and analyzing exposures. With this information you are in a better-prepared position for outlining effective risk management strategies. Also, all insurance carriers and policies are not created equal. There is great deal to consider when selecting an insurance carrier and policy in meeting specific insurance needs.
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Thank you.
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artRisk