Page 20 - AEC Digital Edition
P. 20
First steps towards
a more integrated life market
Milliman’s Messrs Richard Holloway, Michael Daly and David Kong offer ways for the integration process
to start in the life insurance sector, considering the diversity amongst ASEAN’s fast-growing markets.
Wit h less t ha n a mont h to go befor e 31 • The minimum paid-up capital requirement to operate
December 2015, a date widely regarded as the a life insurance company ranges widely between circa
implementation deadline of the ASEAN Economic US$2 million in Laos to circa $29 million in Malaysia
Community (AEC), many are beginning to accept that we (Note: foreign exchange rates as at 31 December 2014);
are unlikely to see full economic integration, at least across
the life insurance industry. • The solvency frameworks differ significantly across
country with some countries adopting Solvency I-type
A regional initiative set in 2007, the AEC aims to framework, while others have implemented Risk
create a single market and production base, a highly Based Capital type frameworks, at different levels of
competitive economic region, a region of equitable sophistication;
economic development and a region fully integrated into
the global economy. • The regulatory reserving methodologies differ, with
both Net Premium Reserving and Gross Premium
While such a vision is commendable, the reality is that Reserving methodologies adopted;
this is not straightforward for the insurance sector, largely
down to the different stage of evolution, maturity and • Foreign ownership limits also differ, ranging from
regulation of the different markets. permitting foreign insurers complete ownership in
six countries, to Myanmar which is a purely domestic
Diversity proving to be a hurdle for ASEAN market;
integration
• There are very different practices regarding the
Differences between life insurance markets in ASEAN are establishment of policyholder protection funds;
highlighted within a recent Milliman research report
“Potential Implications of the ASEAN Economic Community • Six countries have regulatory caps on commission
for the life insurance industry”. As examples: levels, while others do not; and
• Seven countries allow foreign-denominated insurance
policies to be sold, while others do not.
18 AEC – IMPACT ON INSURANCE • DECEMBER 2015 Back to Contents
