AM BestTV: Rising Regulatory Standards in Asia-Pacific Will Erode Protectionism, Say AM Best Directors

OLDWICK, N.J.--()--In this AMBestTV episode, Myles Gould, director of analytics, Christie Lee, senior director and Greg Carter, managing director, all of AM Best said Asia’s insurance markets vary widely by size and levels of insurance penetration. Click on http://www.ambest.com/v.asp?v=apmarket819 to view the entire program.

Carter discussed growth in the Asia-Pacific insurance markets, noting that the region is very diverse, with mature markets down to those in the early stages of development.

“I think since the global economic crisis of 2008, the Asia-Pacific region has seen big opportunities for growth,” said Carter. “With those growth opportunities have come a lot of inward investment, a lot of capital that has been attracted to those markets in order to take advantage of those growth opportunities. That has led to the markets remaining quite competitive, and they are growing quickly. Different rates of growth are occurring across different markets.”

Another reflection of the region’s diversity is the different levels of regulation across the insurance markets.

“Some markets are very mature, while in others we're still seeing those early stages of development,” said Carter. “We’re seeing markets where there's still a degree of protectionism, but slowly, we’re seeing a trend of that breaking down. As regulatory standards rise, then those protectionist activities tend to fall away as regulators look to encourage growth and encourage competition. Generally, once you raise the standards and the capital requirements, then you get an improvement in credit quality over the longer term.”

Lee spotlighted some of the trends AM Best sees in China’s insurance market.

“The China insurance market is still leading global growth, and in 2018, the country continued to record double-digit growth in its life insurance market. However, the underwriting quality continues to deteriorate since the implementation of the motor de-tariffication in 2016. In addition, on the investment side, because of the trade war between China and the United States, there have been additional uncertainties to the country’s economic outlook. As a result, volatilities and investment returns, as well as overall underwriting and investment pressures have had quite an impact on the 2018 overall profit.”

Looking at the balance sheet performance of insurers in Southeast Asia, Gould believes them to be quite robust and adequate. However, he does see pressure on the profitability and operating performance sides. “If your company is not growing at the expected rate, you have got to manage your costs better, and obviously with the competition from a premium rate perspective, the loss ratios have increased in some cases,” he said.

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AM BestTV covers exclusive AM Best and insurance industry information and reports, targeted topics and key developments in the insurance, reinsurance and related sectors daily. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View AM BestTV episodes at http://www.ambest.tv.

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Contacts

Lee McDonald
Group Vice President, Publication and News Services
+1 908 439 2200, ext. 5561
lee.mcdonald@ambest.com

Contacts

Lee McDonald
Group Vice President, Publication and News Services
+1 908 439 2200, ext. 5561
lee.mcdonald@ambest.com