Support for Asean insurance growth prospects

KUALA LUMPUR: The growth prospects for insurance in six major Asean markets are supported by strong socio-economic fundamentals, but the pace and quality of growth will vary geographically, said Moody’s Investors Service.

Moody’s assistant vice-president and analyst Frank Yuen said the fundamentals included urbanisation, a growing middle class, low insurance penetration and the lack of a sufficiently funded welfare system.

“However, the pace and quality of such growth will vary to reflect differences in market maturity, financial depth, demographics and policies, and the insurance industry in these countries are finding different ways to overcome common growth bottlenecks,” he said.

The bottlenecks include difficulties in expanding and enhancing distribution capabilities, low protection content in mainstream products, shallow bond markets that limit investment options and an increasing need to improve the capacity of industries to withstand shocks and support growth through tightening risk-based capital regimes.

Yuen said this in a statement issued in conjunction with the release of Moody’s report, “Insurers – Asean: Growth Comes Through New Policies and Innovations”, which covers Singapore, Thailand, Malaysia, Indonesia, Vietnam and the Philippines.

Yuen said Asean governments were aware of the widening protection gaps in the region, particularly among the underserved segments, and had addressed these concerns through policies.

The report stated that economic incentives for insurance coverage were emerging throughout the region, particularly in medical and retirement coverage.

Yuen said Thailand and Malaysia had witnessed strong premium growth for critical illness and medical products, while Singapore’s ageing working population supports the steady growth in retirement annuity policies. — Bernama