Page 23 - AEC Digital Edition

markets in the areas of (i) Capital Market Development; (ii) insurance in the next round of negotiation targeted in 2016.
Liberalisation of Financial Services (FSL); and (iii) Capital Beyond that, the next steps will be to go for substantial
liberalisation in the remaining insurance sub-sectors such
Account Liberalisation.
The financial system in ASEAN remain for the most as catastrophe insurance and reinsurance. It is believed the
part bank-dominated, particularly in countries which are integration of ASEAN insurance markets will reduce the cost
in the earlier stages of economic development. However, of insurance protection to governments, to businesses as
the role of insurance companies, investment funds, and well as consumers.
pension funds is growing. Aiming at gradual removal
of restrictions for ASEAN financial institutions to offer Capacity building amongst ASEAN insurance
and provide financial services in other ASEAN member supervisors
countries, the Working Committee on Financial Services ASEAN’s enormous achievements to date underline the
Liberalisation (WC-FSL), mandated by the ASEAN Finance strong commitment and political will of the grouping to
Ministers, has made tremendous effort to complete six continue working closely together in the ASEAN spirit of
rounds of FSL negotiations. unity, solidarity, friendship and cooperation.
The Protocol to implement
the Sixth Package of Financial For the smooth and deepening
of insurance market integration
Services Liberalisation was signed pinpointed by WC-FSL, the ASEAN
by the ASEAN Finance Ministers Integration of the Insurance Regulators’ Meeting

in March this year. A number of insurance market under (AIRM) can play a crucial role.
insurance sub-sectors identified this ever-changing global AIRM is a valuable platform for
for liberalisation by 2015 under the region’s insurance regulators
the previous six packages include
direct life insurance, direct non- environment requires to have forthright and open
life insurance, reinsurance ASEAN insurance regulators exchange of ideas, and to foster
and retrocession, insurance closer cooperation.
intermediation, and service The partnership between
auxiliary to insurance. to work hand in hand to the AIRM and the ASEAN
enhance regulatory and Insurance Council (AIC) proves
the importance of collaboration
Insurance liberalisation supervisory framework, between the insurance regulator
gaining momentum harmomise regulatory and the industry in overcoming
Looking at the market structure of challenges from the changing
the insurance sector in the region, regime, strengthen financial landscape and capitalise

life insurance has a relatively large partnership with the on market opportunities in the
market in the ASEAN 5, whereas industry, and build and years ahead. The partnership is
general insurance dominates the also to promote shared ownership
of desired outcomes in supervision
insurance market amongst the strengthen capacity for both and market development.
BCLMV (Brunei, Cambodia, Laos, insurance supervisors and
Myanmar, Vietnam) members. On this note, ASEAN cooperation
in insurance will greatly benefit
And compared to the banking the industry professionals. the development and liberalisation
sector, the insurance industry in
each Member State is substantially of the insurance markets in
the region. Integration of the
more open to foreign investors. insurance market under this ever-
According to data compiled by the changing global environment requires ASEAN insurance
ASEAN Secretariat, domestic insurance companies account regulators to work hand in hand to enhance regulatory and
for more than 60% of the market, while foreign entities supervisory framework, harmomise regulatory regime,
including domestic providers with substantial foreign strengthen partnership with the industry, and build and
equity accounted for 40%. strengthen capacity for both insurance supervisors and
the industry professionals.
However in comparison, cross-border supply of For more effective insurance supervisory system
insurance services is still widely restricted and consumers and practices, most of ASEAN member countries have
have significant barriers. While the Sixth Package contains continuously improved their insurance regulatory and
enabling provisions for the implementation of the ASEAN supervisory frameworks through adoption or observance
Banking Integration Framework (ABIF), the ASEAN of the Insurance Core Principles (ICPs) established by the
Insurance Integration Framework (AIIF) was finalised International Association of Insurance Supervisors (IAIS).
and agreed upon to be used as a platform to further Of course, when going through this exercise, lots of issues
guide progressive liberalisation, to make the insurance and challenges have been encountered. It is thus crucial
market more competitive thus providing greater choice for each member to learn from each other. And the AIRM
for consumers. is a useful forum in which we can consult and share each
other’s experiences and practices in this regard.
In this regard, ASEAN members have agreed to start
liberalising cross border supply in the areas of Marine,
Aviation and Goods in International Transit (MAT)

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