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ASEAN FOCUS

What a unified marketplace
means for insurers

Southeast Asian states have targeted the end of 2015 to create a more
integrated economic region, and the effect on the insurance industry is
potentially wide ranging in the long run – from regulations, distribution,
products, talent and operating cost base, amongst others. We spoke to several
insurers and analysts on what the ASEAN Economic Community (AEC) would
mean for the insurance sector, and questions which CEOs have to answer as they
move ahead in a market aiming for greater cohesion.

By Ridwan Abbas

The idea of a single market is dawning upon the Regulations – differences remain but moving in
Southeast Asian region as it inches closer to its right direction
pledge of creating a unified ASEAN Economic Changes on the regulatory front is on the cards with the
Community (AEC) in 2015. Granted that the 10-member AEC providing a boost to speed up reforms in areas such
ASEAN states are still a long way from achieving true as capital and solvency requirements. In the long run, it
economic integration and liberalisation, but a vision has would translate to an improvement in the financial strength
been set and the bloc is committed to realising it one step of insurers and encourage a healthier playing field. The
at a time. immediate future may however see smaller players being
forced again to consolidate.
It’s been said the year 2015 should be seen as a milestone
towards that journey rather than a strict deadline. But how As part of the initial liberalisation in the region, Mr
should insurance leaders prepare themselves as we approach Steven Dewhurst, Insurance Partner at DAC Beachcroft,
this landmark and beyond? And what sort of impact could expects detarrification measures to be introduced in various
it have on the insurance sector in the near to mid-term? markets.

Potential changes “Short-term regulatory changes we can expect are
Given the economic significance of the financial services detarrification of motor and fire business, as well as
sector, member states have been given greater leeway on the country-specific changes to the regulation of specific lines
pace in which to liberalise their financial services regime. of business which are core to other aspects of trade within
Nonetheless since 2008, the bloc has passed five reform the single market.
packages for the financial services segment.
“Progress has already been made on both, for example
Comparatively, the liberalisation scope for the insurance detarrification is being considered by various countries and
sector is greater compared to the banking industry. The the MAT (Marine, Aviation & Transport) business already
essence of these initiatives is to create an integrated receives different treatment from a regulatory perspective.”
insurance market across ASEAN.
Looking at the big picture, one cannot escape the fact
Mr Jeff Pirie, Executive Director & AEC Leader at that ASEAN states are in differing stages of development,
Deloitte Southeast Asia said the end game should lead to with disparate economic policies and growth agendas. Given
fewer barriers in conducting business in each of the markets. this reality, Swiss Re’s Chief Economist in Asia, Clarence
Wong, believes the momentum towards liberalisation will
“Integrated does not mean uniform, instead it means start off being bilateral in nature.
that there should be few impediments to providing service
(which may involve establishing a presence) in each of the “When liberalisation eventually begins, likely to be
countries within ASEAN. Overall, everyone expects the after 2015, we expect more advanced ASEAN countries to
changes to mean higher growth in insurance in ASEAN.” allow a partial opening up of their markets on a bilateral
basis, allowing the cross-border supply of simple insurance
products between two countries,” he said.

54 SIRC Supplement • November 2015 • www.asiainsurancereview.com Back to Contents