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Commercial presence obligations under the AEC.
To facilitate the implementation of the AEC, what
In Indonesia, foreign insurers wishing to issue insurance
policies to Indonesian citizens or residents must establish is required from the AMC is convergence of regulatory
a local presence, either by setting up a local entity or by frameworks, consistency across the region and
acquiring shares in a licensed Indonesian insurance improvements in prudential standards. However, barriers
company. Any party wishing to undertake insurance to achieving those goals still need to be overcome, including:
business or provide insurance to property in Indonesia • Differences in maturity of regional markets;
must obtain a licence from the OJK. • Protectionist attitudes; and
• The logistical and language issues that surround the
In Thailand, a non-admitted foreign insurer must be
licenced to carry on any insurance business locally, which filing of policies on an international scale.
is a significant restriction on cross-border supply and What cannot be underestimated is the scale of the
consumption. A non-admitted foreign insurer is prohibited opportunities the AEC can offer to the insurance industry,
from marketing direct insurance products and it cannot which should open up a market incorporating 10 countries
facilitate insurance contracts, although such restrictions and 600 million people. The harmonisation of regulatory
do not apply to reinsurance. Conversely, there are no regimes across the ASEAN region could lower costs
restrictions on Thai nationals or residents on the purchase substantially when it comes to cross-border trade in the
of insurance from a non-admitted insurance company. insurance industry, as complexity is reduced and efficiency
increases.
By contrast, in Myanmar, foreign-owned insurance Opportunities in electronic selling as a distribution
entities with a representative office set up in accordance method are also expected to open up across the region,
with the Myanmar Companies Act 1914 may apply for a in line with the AEC’s “e-ASEAN” objective. The deep
licence to operate in Myanmar’s special economic zones. A penetration of tablets and smartphones across the region
US$30,000 application fee applies for these new licences. To presents ripe opportunities for e-commerce, which the
date, three well-known Japanese insurance companies have Asian insurance industry has yet to exploit. The principles
been granted temporary licences to operate for six months of the free movement of persons provided by the AEC
within the Thilawi special economic zone under the new should encourage the movement of talent and knowledge
initiative, mainly offering non-life insurance products. across the insurance industry, as well as making further
efficiencies possible in the form of outsourcing.
Presence of natural persons Despite the apparent delay in implementation of the
AEC, it will nevertheless be advantageous for insurance
In order to work in an AMC, expatriates are required to businesses to have a clear strategy in relation to the
satisfy the local visa requirements of that particular upcoming changes, and to be positioned in such a way to
member country. The history, socio-economic and national take full advantage of the opportunities offered when the
security concerns affect the immigration and expatriate time comes. The insurance industry depends on an open
policies of each AMC. Consequently, immigration and work trading environment, and the introduction of the AEC
permit requirements for each AMC vary greatly. should eventually allow insurance businesses to share
information and spread risk across a global market place.
In some member countries, such as Indonesia and
Malaysia, this process can be very complex and lengthy. Contributors:
Other member countries have a maximum duration of
stay for an expatriate as a foreign worker. For instance, Peter Shelford
there is a maximum duration of two years and three years Country Managing Partner, Thailand
for completion of employment contracts in Brunei and Partner, Singapore
Vietnam, respectively. An expatriate’s term of work is less Co-Chair Insurance Sector, EMEA &
clear in Indonesia as it depends on the individual’s expertise Asia Pacific
and local workforce’s capability; only natural persons who DLA Piper
are either “directors” or “specialists” may supply certain, Joyce Chan
specified, insurance services. Partner, Hong Kong
DLA Piper
The Future
Robert Tang
We can see that advances towards the implementation of Consultant, Thailand
the AEC are varied among the AMC. Local state regulations DLA Piper
remain heavy, particularly in the AEC goal areas of cross-
border supply and consumption of insurance services.
Although integration had been set to happen before the
end of 2015, it now seems impossible in most countries for
this deadline to be met. It is indeed uncertain when these
agreed changes will occur, given that the agreed date for
implementation will soon have been and gone, and yet no
new date has been formally agreed. It is expected that the
integration will occur in the years leading up to 2020. We see
that the legislative and regulatory changes already made
by the AMC as evidence of a firm commitment to fulfil their
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