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We ask the CEOs what their top concerns are for 2015 and here’s what they have to say in their own words.
Cybercrime intensification and promoting risk management
“Businesses need to safeguard against cybercrime and data breaches whether they be the result of sophisticated computer hacking or employee error. There is an obligation to constantly monitor the cyber landscape and the insurance industry needs to constantly evolve to keep on top of cyber risks as these become increasingly sophisticated. These threats will only expand and intensify in 2015.
In 2015, companies must continue to make key decisions based on their respective risk appetite in balancing risk, profit and growth. Each market is different, but a solid governance structure and an ability to manage risk is paramount for companies if they want to increase profitability, maintain shareholder confidence, reduce volatility and protect their reputation.”
Mr Jose Hernandez
President & CEO, Asia Pacific, AIG
The digital trend and catering to new millennial customers
“One of the biggest concerns will be how to attract new millennial customers whose behaviour is completely different to that of our current customers. The millennial customers use digital devices much more than conventional devices. In addition, they have become more demanding, preferring to use digital devices to manage their personal and financial needs, and demanding information or services anywhere, any time and all the time. Insurance companies need to fine-tune their business processes to cater for such demanding future customers.”
Mr George Sartorel
Regional CEO, Allianz Asia Pacific
“Digitalisation will probably have a significant impact on many business models in the future and is consequently embedded in Munich Re’s overall strategy. It will bring challenges and opportunities for the insurance industry along the whole value chain. Big data applications should make it possible to assess risks at an earlier stage and even more precisely. Munich Re believes that the improved possibilities for data analysis and greater data resources will create opportunities to make previously uninsurable risks insurable and thus to tap into new business segments.”
Mr Roland Eckl
Chief Executive for Australasia, Japan & India,
Munich Re
Global events
“The risk landscape for global businesses in 2014/2015 is becoming increasingly complex, given the threats posed by a number of both natural and man-made hazards, as well as the ever tightening regulatory and legal regimes. This, in turn, could lead to many pitfalls in the landscape of the insurance claims world.
2014 also saw two major aviation losses in Asia, and the fall in oil prices has had an impact on the demand for vessels in the oil and gas sector in the Asia Pacific region. Hence, 2015 is likely to see a fall in freight prices which, in turn, may result in an oversupply of freight tonnage and a drop in new builds. This will result in a soft market and impact claims trends for 2015.
The outbreak of Ebola, consistently low interest rates and increased sanctions against Russia are also factors that will have an impact on claims trends for 2015.
Amlin’s strategy in managing these claims trends is two pronged: firstly, at the point of inception via risk management; and secondly, at the claims stage via proactive claims management.”
Mr Simon Clarke
Managing Director, Amlin Singapore
“According to David Guest, our underwriting expert on crisis management, the expansion of ISIS in Iraq, Syria, eastern Libya and Egypt this year saw an influx of supporters from countries such as the UK, Australia, Europe and Asia. Many of these rebels, who have received insurgency training and ideological indoctrination during their time in the Middle East, are expected to return to their home countries in 2015, bringing with them new and unknown terrorism related risks. The crisis management arm of the insurance industry is working with private and public sector stakeholders to prepare for and mitigate the impact of returning rebels.”
Mr Andrew Vigar
Regional Manager, Asia, XL Group
Continued growth
“Our top three concerns for the year ahead are: i) Growth, ii) Growth and iii) Growth. While this may seem a facetious response it is not intended to be. Any other concerns are really a subset of our focus on growth.
We manage growth by remaining relevant to our clients and potential clients by constantly listening to what their concerns are and their objectives. Our growth in simple terms comes from our capability in quantifying and transferring risk and matching these capabilities to help our clients achieve their own objectives. The most frequent request from clients in the region is also support in in developing new products. In light of the Aon’s vast bandwidth across the world of risk, we are well positioned to assist clients with new product development which in turn can result in substantial growth opportunities for us.”
Mr Malcolm Steingold
CEO, Asia Pacific, Aon Benfield
“Whilst principally a concern for reinsurers, the continued competitive pricing environment will almost certainly continue into 2015 and possibly beyond in the absence of any catalyst to alter market pricing dynamics. Both reinsurers and their insurance clients are continuing to look at the best way to adapt their strategies to the new environment which could well be a more permanent shift in our industry as opposed to a cyclical one, given not only the amount of capacity available in the market but the speed at which new capital can be deployed.
Perhaps one of greatest challenges for the long term success of the industry is to increase the sales penetration of general insurance products throughout Asia. In certain markets we continually witness a very significant difference between the insured loss arising out of an event and the economic damage. The challenge for our industry across both insurance and reinsurance is to work to close this gap by offering insurance products which consumers and businesses see value in purchasing.”
Mr James Beedle
Senior Managing Director, Willis Re Asia
Developing markets, maintaining discipline and delivering innovative solutions
“I expect the same trends to continue and we will be working closely with Asian regulators to develop open and liberal markets to allow cross-border insurance and reinsurance to flow freely.
We need to continue to maintain underwriting standards to achieve profitable and sustainable underwriting. In addition to applying robust underwriting discipline, we will seek to introduce new products to differentiate ourselves from our competitors.
We also need to stimulate insurance demand by delivering innovative solutions which meet our customers’ changing requirements and by raising awareness of the positive role our industry plays in protecting economies.”
Mr Kent Chaplin
Head of Asia Pacific, Lloyd’s
“Abundant liquidity, made available by central banks all over the world, is increasing competition. A difficult environment, but certainly not without interesting opportunities. Against this background, Munich Re believes price discipline, consistent cycle management and underwriting discipline are imperative. With our strong client relationships and our technical expertise combined with in-depth local market knowledge, we should be able to generate new business opportunities in spite of the current market environment.
Despite the current market situation worldwide, Munich Re expects a moderately increasing demand for P&C reinsurance in Asia, driven by growth markets and a greater need for innovative and tailor-made insurance solutions that cover new risks. We are in close contact with our business partners to jointly pursue innovative ideas in terms of new product features, distribution channels, etc. It is particularly important for us to be flexible and to adapt to this emerging and changing risk landscape.”
Mr Roland Eckl
Chief Executive for Australasia, Japan & India,
Munich Re
Underwriting profitability
“Underwriting profitability is expected to be a challenge due to the excess capacity as well as reserve releases potentially moving in the opposite direction.
QBE will continue to explore ways to offer value beyond price for our customers as market remains soft in the new year. Greater focus is placed on developing customer value proposition delivered globally through: 1) our customer focused underwriting and claims service approach; 2) geographical reach via segmentation, product design and distribution channels; and 3) increased leverage of our balance sheet and capacity to take on risk with a multinational footprint.”
Mr Shaun Standfield
Chief Underwriting Officer – Asia, QBE Asia Pacific
Talent acquisition
“Getting the right underwriting talent in the right places. We have, and are continuing to actively follow a strategy to combine local knowledge and experience with global expertise in all of our operations worldwide.”
Mr Andrew Vigar
Regional Manager, Asia, XL Group
“Asia’s sustained economic growth has inevitably attracted new entrants to the region as insurers see enormous opportunities here. This intensifying competition creates a battlefield for employing quality talent and puts downward pressure on pricing as new players seek to capture a greater market share.”
Mr Stuart Spencer
CEO, General Insurance Business, Asia Pacific,
Zurich Insurance
Economic environment and regulatory changes
“Economic uncertainty is high on the agenda, given a slowing Chinese economy, the risk of Japan falling back into recession, and impending interest rate normalization in the US. Close monitoring of the global economic landscape and holistic risk management, including active use of scenarios, will be important in coping with this challenge.
Regulatory change is another key concern. The implementation and revision of a risk-based solvency regime is gathering momentum. There are on-going improvements in regulations to better protect consumers. We are also expecting increasing regulatory convergence across the region. Close monitoring and proactive dialogue with regulators and stakeholders are keys to successfully managing this issue.”
Mr Clarence Wong
Chief Economist, Asia, Swiss Re
“Another challenge for us as an industry is to manage and adapt to the ever-changing regulatory environment. Two examples currently include China and Indonesia where new rules are being discussed albeit there remains significant uncertainty as to what the final rules will entail. The reinsurance market would hope for certainty around these rules as soon as possible to facilitate longer term response planning.”
Mr James Beedle
Senior Managing Director, Willis Re Asia
“The overarching theme for 2014 had been how the insurance industry was dealing with the sustained, historically low interest rate environment that has led to lower levels of investment income derived from premiums. This theme is set to continue in 2015 as insurers need to offset lower investment income by expanding their margins through disciplined underwriting, adjusting prices, paying greater attention to expense management and being more selective with risk.
Regulation is another hot topic that will continue into 2015. There is always the potential for more comprehensive and complex regulations to be imposed on the industry, which does impact how insurers can provide a seamless web of coverage to multinational clients.”
Mr Stuart Spencer
CEO, General Insurance Business, Asia Pacific,
Zurich Insurance
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