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Malaysia Wants A More Competitive Asean Insurance Industry
November 16, 2007 21:33 PM
KUALA LUMPUR, Nov 16 (Bernama) -- Malaysia wants all the players in the Association of Southeast Asian Nations (Asean) insurance industry to increase their competitiveness as a region in order to retain a greater share in the insurance business.
Bank Negara Malaysia Deputy Governor, Datuk Mohd Razif Abdul Kadir said there was a great potential for the Asean players to retain a greater share of the insurance business particularly in reinsurance and underwriting of large, specialised risk which traditionally flows out of the region, he said.
In order to increase the region's capacity and expertise to underwrite such risks, greater collaboration in the form of technical assistance and information sharing is important, he pointed out.
Mohd Razif said this in his speech at the opening of the 10th ASEAN Insurance Regulators Meeting and 33rd ASEAN Insurance Council Meeting Thursday.
He said through such collaboration, the ability for the insurance industries in Asean to underwrite and reinsure risks to serve the needs of the Asean businesses and individuals can be significantly enhanced.
The industry should work together with the regulators to explore ideas to build capabilities and capacities while initiatives to harmonise standards across countries should continue, he said.
A more systematic and structured information sharing mechanism through a regional centre can also serve as a catalyst for the development of the industry.
Asean's population of 568 million, and the younger generation's changing priorities and lifestyles - growing wealth and increasing proportion of middle income population - will also support continued and further growth in demand for investment-linked and wealth management products, he said.
As a result, the insurance industry has, and will continue to, expand its role beyond merely providing protection products, Mohd Razif said.
Last year, the insurance premiums averaged 2.95 percent of gross domestic product (GDP) in South East Asia compared with 8.8 percent in the United States (U.S) or 16.5 percent in the United Kingdom (U.K).
A significant development has been the evolution of alternative distribution mechanisms for insurance products and services in the region, notably through bancassurance, Mohd Razif said.
"Perhaps, in those markets where the insurance distribution channels through agency force have yet to be firmly established, bancassurance could provide a quantum leap to allow insurers to rapidly widen their outreach by tapping into an established banking network and client base.
"Worldwide, insurers have been successfully leveraging on bancassurance to gain a foothold in markets with low insurance penetration and a limited variety of distribution channels," he said.