Demographic changes 'to fuel life insurance'
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CHANGING DEMOGRAPHICS could help drive demand for certain life-insurance products in Asian markets, said Jeffrey Liew, head of Asia-Pacific insurance at Fitch Ratings Hong Kong. He said the rising proportion of the elderly and retirees in some markets in
In Thailand, premiums from personal accident and health insurance account for less than 25 per cent of the total.
He said demand for investment-linked products was particularly high in Malaysia and Indonesia, both of which have growing numbers of middle-income people and young adults who can accept risk.
The trend of automated insurance products is rising as insurers use the Internet to cater to the increasing numbers of tech-savvy consumers.
China and Southeast Asia, including Thailand, have relatively low insurance-penetration rates, which could offer room for growth, and after the Asean Economic Community (AEC) is successfully implemented, Asean life insurers’ global competitiveness is expected to increase in the next three to five years, Liew said.
He said the AEC aimed to create a more open market in Asean countries, and free flow of economic resources in a region with a 600-million population represented growth opportunities for many life insurers.
Insurers with strong capitalisation and high underwriting capacity are expected to get the most benefit from the AEC.
Life premiums in Thailand amount to less than 4 per cent of gross domestic product, so in Fitch Rating’s view, this country remains poised for steady growth. Bancassurance plays a key role, but agency distribution remains important as well.
Policies written through bancassurance last year almost doubled compared with 2010, and life insurers with exclusive partnerships with the top four Thai banks were the main beneficiaries.
Both distribution channels represent almost 95 per cent of policies written.
Political instability will continue to challenge the life-insurance industry in Thailand, while Fitch Ratings noted that the industry elsewhere in the Asia-Pacific region also faced challenges, such as mature markets in Japan and Taiwan.
The opportunity for growth in the life-insurance industry in emerging Asia-Pacific markets is likely to bring more mergers and acquisitions. Moreover, tighter regulations will pressure smaller insurers to look for strategic partners to strengthen their capital positions.
