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Asia-Pacic
TrinhPham,a25yearoldofficeworkerinHoChiMinhCity,vividlyremembersthedayshe
decidedtojoinaninsuranceprogramme.
Mycolleaguesuddenlypassedawaythreemonthsagowithcolorectalcancer,shesaid.Ifeltso
sorryforhimandhismother,whomhehadbeentakingcareof.Butfortunatelythelifeinsurance
schemethathewasenrolledinleft100mdong($4,390)forherenoughforhertostarther
ownsmallbusinesstomakeendsmeet.
MsTrinhisnowpreparingthedocumentstobuybothhealthandlifeinsuranceforherself.If
somethinghappenstome,Icanleavemoneybehindformyelderlyparents.Ifnothinghappens,
shesaidwithasmile,thenitsthesameassavingupforthefuture.
CasessuchasMsTrinhsarenolongerararityinAsia,wheretheinsuranceindustryhasgrown
rapidlyinthepastfewyears.InIndonesia,Thailand,thePhilippines,VietnamandMalaysia,the
marketasmeasuredbygrosswrittenpremiumsgrewacombined41.9percentbetween2010and
2015to$59.5bn,accordingtoreinsurancecompanySwissRe.
Inthesameperiod,theChinesemarketalonegrewby80percentto$386.5bnmuchfaster
thanthoseofJapanortheUS.
Thetrendisexpectedtocontinue.BostonConsultingGroupestimatesthecompoundannual
growthrateofthelifeinsurancemarketinemergingSoutheastAsiancountriestobearound8
percentto13percentthrough2020.Itprojectsa7percentto11percentgrowthrateforthe
nonlifesegment.
Theindustrysrisehasimplicationsfarbeyondhelpingindividuals.TheUnitedNations
considersinsuranceakeyingredientforacountryseconomicgrowth.Asfarbackas1964,aUN
ConferenceonTradeandDevelopmentreportstatedthatasoundnationalinsuranceand
reinsurancemarketisanessentialcharacteristicofeconomicgrowth.
Streets in Phnom Penh, as in many other Asian cities, are congested with motorbikes, tuk-tuk and cars. Ken Kobayashi
InaregionasdiverseasAsia,eachcountryhasdistinctivefeaturesdrivingthegrowthofthe
insurancesector,butthereareafewcommonthemes.
Thenumberofpeoplewhosignuptoinsuranceprogrammestendstoriseintandemwitha
nationseconomicgrowth.Risinghouseholdincomesallowpeopletoputasidemoneyforthe
future,someofwhichgoesintoinsurance.Householdsalsobecomemorelikelytobuyexpensive
items,suchascars,onwhichtheytakeoutnonlifepolicies.
Socialchangeslinkedtoeconomicgrowthaffectthelifeinsurancesector,too.AreportbyPwC,
theaccountingfirm,pointsoutthaturbanisationislikelytoincreasepurchasesoflife,annuities
andpensionsproductsaspeoplemigratingintocitieshavetomakeindividualprovisionforthe
futureratherthanrelyingonextendedfamilysupport.
WorldBankdatashowthatinIndonesia,forexample,theurbanpopulationgrewalmost15per
centfrom2010to2015thelifeinsurancemarketexpanded32percentinthesameperiod.In
Thailand,theurbanpopulationgrewabout16percent,whilethelifeinsurancemarketswelled
66percent.
The early morning wait for treatment at Kantha Bopha children's hospital in Phnom Penh. Ken Kobayashi
Moreover,inaregionwherethe1997financialcrisishasleftalegacyofdistrusttowardsbanks,
insuranceisseenasaninvestmentvehicleratherthanjustprotectionforarainyday.Products
combininginsurancewithinvestmentaregainingpopularityinSoutheastAsiancountriessuch
asIndonesia,forexample,eventhoughsomeofferlowerreturnsthanbankdeposits.Theyoffer
warysaversanalternativeplacetostowawaytheircash.
Theindustryarguesthatitcanhelpaddresstheregionschronicsocialandeconomicproblems.
Inmanyofourcountries,publicsystemsofsocialprotectionareunderdeveloped,saidMichael
FRellosa,chairmanoftheAseanInsuranceCouncil,atanindustrygatheringinIndonesialast
November.Insurancecancomplementbasicsafetynetsinhealthcare,postretirementincome
orevendisasterrecoveryplanning.
InCambodia,statesocialsecurityprogrammesoftenfailthoseinneed.Publichospitals,in
principle,providelowincomepatientswithfreemedicaltreatment.However,food,certain
specialistmedicinesandtravelthebetterpublichospitalsareinthecapital,PhnomPenhare
notcovered.
Wehadtomovetothepublichospitalbecausetheprivateonewasjusttooexpensive,said
Sarath,whosefamilymakesalivingdeliveringvegetablestorestaurantsinthecapital.Sarath,
whogaveonlyherfirstname,explainedthathersoninlawhadbeenseriouslyinjuredwhenhis
motorbikecrashedwithatuktuktaxi.Theprivatehospitaltowhichhewasinitiallyadmitted
cost$120anight,includingambulancefees.Cambodiasnominalmonthlywagewas642,000
riel($160)in2014.
Sincethefamilyisnotdefinedaspoor,thepublichospitalischarging$10anight.Expenses
havepiledupto$2,000inthethreeweekssincetheaccident.Weveusedupallthemoneywe
hadbeensavingforemergencies,saidSarath,52,whohadnoideahowmuchlongerthe
treatmentcouldtake.[Insurance]mighthavehelped.
Onamacroeconomiclevel,insurancecompanieshavethepotentialtohelptackleoneofAsias
mostpressingproblems:alackofinfrastructure.
TheAsianDevelopmentBankestimatesthat,tomaintaineconomicgrowth,theregionneeds
investmentof$26tninbigprojectsby2030.Withitslongtermfinancingpower,theinsurance
sectorcouldactasanimportantsourceoffundingespeciallywhere,asBambang
Brodjonegoro,Indonesiasnationaldevelopmentplanningminister,saidatlastyearsAsean
insuranceconference,fiscalconstraintleavesthegovernmentwithlittleroomforpublic
investment.But,withtroubledanddelayedprojectsscatteredacrosstheregion,theindustryis
wary.
InChina,theregionsfastestgrowingmarket,problemscausedbytherapidexpansionofthe
marketarestartingtosurface.Followingarelaxationofrulesabouttheguaranteedratestheycan
offeronlifeinsurancepolicies,insurersespeciallyneweroneshavetriedtolurecustomers
withthepromiseofgenerousreturnsthroughinvestmentlinkedpolicies.Theeasingof
investmentruleshasalsoencouragedambitiouscompaniestopursueriskierassets.
Withthepremiumscollectedonhighyieldpoliciessoldbyitsaffiliate,ForeseaLifeInsurance,
privateconglomerateBaonengGroupstagedahostiletakeoverbidforChinaVanke,thecountrys
leadingpropertycompany,bysnappingupsharesworthbillionsofdollars.YaoZhenhua,Chinas
fourthrichestmanandthechairmanofBaonengGrouplabelledabarbarianbyVankes
chairmanwasinFebruarybannedfor10years(http://next.ft.com/content/37d43dcefa7d11e
695162d969e0d3b65)fromtheinsurancesector.
AnbangInsuranceGroup,too,hasusedsalesofinvestmentstylepoliciestofundoutbound
investments.ThepremiumscollectedbytheBeijingbasedbusinesshavedoubledto114.19bn
yuaninthepasttwoyears.AmongthemanytrophyassetsthegrouphasboughtisNewYorks
WaldorfAstoriahotel.Itwasrumouredtobenegotiatingapurchaseofa$400mstakeinaFifth
AvenueskyscraperwithacompanyownedbythefamilyofUSPresidentDonaldTrumpssonin
law,JaredKushner,thoughAnbanghasdeniedthis.
Analystssaythatamismatchbetweenshortdatedmaturitiesontheirpoliciesandarangeof
longterm,illiquidinvestmentscouldposeathreattothestabilityofinsurers.TheChina
InsuranceRegulatoryCommissionsteppedinlastyear,proposingtotightenregulationofnew
entrantsandproductofferings.
Despiteitsrecentexpansion,theAsianinsurancesectorremainscomparativelyunderdeveloped.
ThecombinedmarketsizeofIndonesia,Thailand,thePhilippines,VietnamandMalaysiain2015
wasonly13percentofJapansand4.5percentofthatintheUSintermsofgrosswritten
premiums.Thesocalledpenetrationrateforlifeandnonlifeinsurancecombinedstandsat
about1percentto5.5percentforthesefivenations,asopposedtoabout11percentforJapan
and7percentfortheUS.Penetrationratesarecalculatedasthetotalvalueofinsurance
premiumsasaproportionofGDP.
Anoptimisticviewonetakenbymanyintheindustryisthatthisgaprepresentsan
opportunity.InternationalinsurerssuchasAXA,Prudential,AllianzandManulifearebuilding
strongfootholdsintheregion,withJapaneseinsurerslikeDaiichiLifeInsuranceandNippon
LifeInsurancebitingattheirheels.
Governmentsareloathtoletinsurersambitionsgounfulfilled.InMyanmar,forexample,where
thestateruninsurerlongenjoyedamonopoly,theindustryhasbeenopeneduptodomestic
businesses,with12newcompanieslicensedin2012.Forforeignrivals,accessislimitedbutthe
governmentiscontemplatingfurtherliberalisationthisyear.
Thespreadofdigitalaccesshelps.Utilisingdigitaltechnologytosellinsuranceproductsisa
topicthatinsurersinthisregionareworkingon,saidYasushiSasaki,apartneratBoston
ConsultingGroup.Chinaleadsthetrend,witharound330mpeoplebuyinginsuranceproducts
online,accordingtoa2016reportbyAntFinancialServicesGroup,anaffiliateofChinese
internetgiantAlibabaGroupHolding.
At Bangkok Life Assurance's oice in Bangkok, agents' sales are represented by paper ornaments. Ken Kobayashi
Meanwhile,BangkokLifeAssurance,aleadingThailifeinsurerpartlyownedbyJapansNippon
Life,isgoingoldschoolinpursuitofbusiness.Ithasemployed40salesagentswhovisit
designatedofficesaroundthecapital,buildingtrustbyholdingseminarsanddistributingleaflets
printedwiththeircontactdetailsjusthowJapaneseinsurershavebeencultivatingcustomers
foryears.EachagentssalesarerepresentedbypaperornamentsbackattheBangkokLifeoffices.
In2016,policiessoldbytheteamincreased80percentyearonyear.
Yetthesectorisstillgrapplingwithlonglastingreputationproblems.InthePhilippines,the
preneedindustrywhichcoversthingslikefutureeducationandfuneralneedsnearly
collapsedin2005aftermanyinsurerssankintofinancialtrouble.Manyparentswereleftwithout
fundingfortheirchildrenseducation,leavingastainonthecredibilityofthecountrysinsurance
sector.
And,formanyconsumers,theproblemsofdealingwiththeindustryarethesameasever.
Reportsofdifficultysecuringpayoutsarewidespread.Itiseasytogivetheinsurersmoney,said
ThuyChau,afinancialadviserinHoChiMinhCitywhoneededapayouttotreataliverproblem.
Butitisverydifficulttogetitout.Herrequestwasrejectedbyherinsurer,whichsaidshewas
toonewtotheprogramme.
Despiteitsshortfalls,thereisnodenyingthatinsuranceenablesriskstobeminimisedand
managed,thusdrivingacountryforward.Byhavinginsurance,onecantakethenextrisk,which
turnstheeconomicwheels[ofacountry],saidMrSasakiatBCG.Itstruethatthepresenceof
theinsurancesectorisincreasing,andIthinkAsiancountriesareenteringavirtuouscircle
wherebythesectorhelpseconomicactivitiesinthosecountries.
NikkeistaffwritersYukakoOnoinBangkok,JoyceHoinHongKong,andCliffVenzonin
Manilacontributedtothisstory.
Aversionofthisarticle(http://asia.nikkei.com/Features/RunningforCoverage/Insurancepr
omisesAsiamuchmorethanpeaceofmind)wasfirstpublishedbytheNikkeiAsianReview
onMarch23.Website(http://asia.nikkei.com/?n_cid=NARAN212&utm_source=FTwebsite&ut
m_medium=bottom&utm_content=textlink&utm_campaign=FTwebpromo)|Subscribe(http
s://regist.asia.nikkei.com/member/register/?n_cid=NARAN213&utm_source=FTwebsite&utm
_medium=bottom&utm_content=textlink&utm_campaign=FTwebpromo_subs).2016Nikkei
Inc.Allrightsreserved.
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