With respect to the market outlook, ‘cautious growth’ is a phrase we have heard used a great deal within the Insurance industry. The global economy is expected to grow modestly, including in more mature markets such as Singapore where the Insurance market has become more competitive in recent years.
However, as we move into 2017, emerging markets (and in particular Asia) are predicted to be the main driver for growth across life and non-life Insurance. In a recent report, Swiss Re forecasted emerging market life premiums to grow by almost 15% in 2017 and by 11% in 2018, with emerging market non-life premiums to grow by almost 8% in 2017 and by 9% in 2018. Reinsurance premium growth is expected to be 8% or higher in the emerging markets over the next 2 years.
There are some particular highlights across emerging markets in South East Asia.
Myanmar is going through an exciting period as the government plans to allow international firms into the Myanmar Insurance market this year as part of a 'liberalisation roadmap'. Currently, there are 12 local insurers operating in the domestic market. There are over 20 foreign insurers with representative offices in Myanmar and 3 Japanese insurers operating in the Thilawa special economic zone. Moving forward, representatives from international firms will sit on a new Myanmar insurance association which is likely to be in place from February. Although the ‘liberalisation’ will be cautious, the government appear to does understand the need for foreign expertise, particularly in the life sector, and eventually, firms will be allowed to design their own products and set their own tariffs.
Detariffication of motor and fire insurance is also expected this year in Malaysia. In preparation, insurance companies have been developing their technologies in pricing models - new products, higher premiums and lower claims ratio should improve insurance profit. A more competitive price market could potentially lead to an increase in M&A activity, though. Interestingly, Lloyds have applied for a Malaysian Licence as they look to expand in Asia at part of their ‘Vision 2025’ strategy.
There have been some particularly positive forecasts for the Vietnam insurance market. With a strong economic outlook and government policies to create a framework for the development of new products such as insurance for public assets and diseases, the insurance market is predicted to experience significant growth for this year. Mr Phan Kim Bang, President of the Vietnam Insurance Association expects more than 25% growth for life insurance and 14% for non-life insurance.
Indonesia is another market where life insurance firms expect to maintain double-digit revenue growth this year, driven by the country’s economic recovery – the Indonesian Life Insurance Association (AAJI) has predicted that revenue would grow by at least 10 percent, although the Insurance industry has seen annual revenue growth between 10 and 30% for the past 10 years.