Blog: East Asia Insurance Congress 2014

The highlight speech was from Inga Beale, head of Lloyd's, who was just completing a mini-tour of Asia. She ambitiously announced insurance was on the verge of a "golden era".

In particular, she was excited by the prospect of three million insurance professionals working in the insurance sector in China, as well as the fact that the Insurance Association of China is providing online training for these professionals.

Beale told the audience of the huge opportunity for brokers, insurers and reinsurers for serving the millions of SMEs across Asia. She noted only 7.6% of economic losses in Asia caused by natural catastrophes were insured last year - compared with 67% in the US.

Beale commented: "Lloyd's' own research has uncovered a global insurance gap of $168bn in premiums needed to protect economies against their catastrophe exposures. In a study of 42 countries, we found 17 were underinsured against their
exposures - and eight of these were in Asia."

Dr Stephen Mildenhall, global CEO of analytics, Aon Benfield, agreed with Beale that natural catastrophes are something of a business opportunity. He suggested some of the impact of climate change had been exaggerated, and that there is, in fact, enough capital for insurers and reinsurers to cope with climate change.

However, models cannot entirely predict the future of a warming world.

Philippines-based Dr Pedro Benedicto, president, Republic Surety and Insurance, warned models need to be married with "gut instinct" and they can't predict the future. He said: "Nobody predicted the storm surge after typhoon Haiyan."

A stark example of the impact on profitability from climate change was provided by the Thai General Insurance Association, who reported the loss ratios of the medium-sized businesses in the Thai floods were 355.6% in 2011.

This brought the average COR to 149.1% between 2008 and 2012, compared with 90.7% in the four years which exclude the floods (during the same period).

Although there is still huge underinsurance in Asia, growing consistently and profitably is easier said than done.

Economic growth has been so rapid in recent years it will be hard for Asia to keep to the same level, particularly as the US Federal Reserve unwinds its fiscal easing policy which has helped cheap credit permeate across Asia - for example, helping inflate house prices in Hong Kong.

Growth levels are uncertain across the region. For example, according to the Office of National Economic and Social Development Board, the economy grew in Thailand by 2.9% in 2013 as opposed to 6.4% in 2012. General insurance premiums grew 13.1% to $6.5bn, but insurance penetration is low at only 1.7%.

But one thing is certain - there was a good feel to the parties, including three near the top of the Taipei World Financial Centre, the tallest building in the world from 2004 to 2010.

The next East Asia Insurance Congress will be in the casino mecca of Macau in 2016; here is hoping many more SMEs across Asia will be insured by then.

Andrew Tjaardstra, editor, Asia Post
www.postonline.co.uk/category/asia

Post was a media partner of the 27th East Asia Insurance Congress