Buckle up in the EAIC’s time-travelling DeLorean automobile
Never before has the EAIC community been more in need of a crystal ball than it is today – with the myriad threats of climate change, cyber risk, uncertain interest rates and rising geopolitical tensions facing the entire region.
Thankfully, this edition of the East Asian Insurance Congress, held in the vibrant city of Hong Kong, has never before had such a prescient theme – ‘Back to the Future – Empowering East Asian Insurers for 2044 and Beyond – Building on the Foundation and Exploring the Future’.
The days ahead are bursting with ‘must-attend’ sessions guaranteed to get delegates thinking and offering insights for winning insurance strategies. Delegates are sure to leave the conference with a real competitive advantage over those who have missed out.
Each day, Asia Insurance Review through its official media partner status with EAIC, will offer delegates a recap of what’s been discussed – and some fascinating insights of our own – in this daily newsletter, available both in print and digitally.
Every single major risk and technological development to face the insurance community in East Asia will receive a thorough airing in the days ahead – insights from some of the brightest minds and smartest thinkers that the sector has to offer.
Some of the headline issues that will be tackled include economic uncertainty for a resilient future, derisking climate change, sustainability, technology, the gender gap, insurance literacy and the war for talent.
And of course, the four days of EAIC 2024 will also allow plenty of time to catch up with old acquaintances and make new ones.
If future success is awarded to those who are best prepared, there can be few forums more geared to arming insurers with all the weapons they need to win the competitive battle that looms ahead over the next decade as AI begins to take centre stage. -Mr Paul McNamara, Editorial director, AIR and MEIR
Back to the future
L-R: Ms Sally Wan, Messrs Michael Wong, Michael Rellosa and Ivan Tam
The 30th EAIC opened its doors in Hong Kong yesterday evening, with the Hong Kong government’s acting financial secretary Michael Wong kicking things of by addressing the various issues that the insurance industry is attempting to solve in the coming years. “[Climate change] is a present-day problem, and we believe that insurers have the ability to absorb its impact,” he said. “The insurance industry in Hong Kong have taken steps to ensure sustainability through initiatives such as insurance-linked securities and catastrophe bonds, which will offload unwritten risks to the capital markets. He highlighted the measures that the Hong Kong government took to promote ILS in 2021, which has led to five issuances, totalling $713m. “We believe that the insurance sector has a growing role to play in helping the world mitigate the impact of climate change,” he said.
EAIC president and Philippines Insurers and Reinsurers Association executive director Michael Rellosa took the stage afterwards, stating that the insurance landscape in East Asia has undergone several transformations since EAIC’s inception 62 years ago. “[These changes] were driven by advancements in technology, shifts in regulatory frameworks, evolving consumer expectations and global events that have tested our resilience and our adaptability,” he said.
This year’s themes of innovation and adaptation are more relevant than ever, he said, as the industry attempts to navigate the complexities of the modern age. “The insurance industry, like many others, have been thrust into the spotlight by the challenges of the COVID-19 pandemic,” he said. “The experience underscored the vital role that insurance plays in providing security and peace of mind for individuals, families and businesses alike.”
The pandemic has forced the industry to rethink its strategies, embrace digital transformation and prioritise customer-centric approaches. “As we emerge from this period of uncertainty, the need for robust risk management solutions and the ability to rapidly respond to evolving needs have never been clearer,” he said. The next few days, he said, will allow the industry to explore various topics that have the potential to shake up the insurance landscape once again, from the rise of AI and big data analytics, to the importance of sustainability and ethical practices, all of which are critical to the industry’s success.
Navigating current uncertainties with technology
Mr. Bernard Charnwut Chan
Five years ago, AI was not a common term, but today it is touted as the main driver of change around the world. The insurance industry is no different in this regard, but Asia Financial Holdings chairman Bernard Charnwut Chan has some questions for the proponents of AI.
“How will it change the industry? Who will regulate it? Where are the transparencies? Who is setting the rules?” he said, during his presentation at EAIC yesterday morning.
“There are no answers to these questions, but one thing is for certain – AI is not going away,” he said.
He also brought up the fact that industries today are all married to technology, with terms like fintech, InsurTech, regtech and medtech being introduced over the past decade.
“Industries are no longer siloed. When I first began chairing the committee for the innovation and technology scholarship scheme, it was all science students. Today, we have students from across all disciplines. That’s why it’s ‘fin’ plus ‘tech’ – but the question is, who is leading?” he said.
All this focus on technology, he said, could be an avenue for the insurance industry to attract and retain new talent, to increase excitement for new graduates to join the industry.
Hong Kong’s new role
Mr Chan also noted that over the last 40 years Hong Kong had been the gateway for capital to flow into China, but with the rapid growth and reform of the Chinese economy, Hong Kong’s role has changed.
“Today, Chinese enterprises can no longer position themselves as ‘just a Chinese company’. They must diversify, so they are expanding outside of China,” he said. “And Hong Kong’s new role is helping these enterprises de-risk.”
De-risking is the new term du jour, he said, and it will be here to stay for the next 10 to 15 years. “We can no longer afford to have a concentration of business in one place, one location. Each country will have to grapple with this issue in its own way, and as a service industry, we have to find a way to help them achieve this goal.”
With all of these changes in dynamics, one thing remains true: The insurance industry must remain resilient, adaptable and always be engaged, he said.
Industry needs to build workforce for next generation
Mr. Franz Hah
By 2033, the Asian insurance industry will need a total workforce of 2.3m people. The industry currently has a workforce of about 1.1m, but a large portion of those will be over the age of 60 within 10 years.
“Already in every company across Asia we are saying that we lack talent,” said Peak Re CEO Franz Hahn, during his presentation yesterday. “Getting another 1.2m people for our industry is a tall order, and the same even applies to the US and Europe. We need to think creatively about how we recruit people and how we retain them.”
At the same time, he also said that the way the industry currently operates is not sustainable, calling the competition for talent between companies ‘unhealthy’. “We cannot just fulfil our needs for talent and snatch them from other companies. We have to learn to get better, to hire and build people from within the company.”
He said that it is vitally important for (re)insurers to become ‘learning organisations’, a place that can attract and develop fresh talent. He also emphasised the importance of ‘lighthouse talents’, the older generation of workers who are nearing retirement, but can still help develop the newer generation.
He also said that the boomer generation had made a big mistake in failing to create a solid workforce and talent pool from which the industry could draw. “My generation has been failing miserably to bring good people into the industry and to retain them in the industry. And that’s why we have the problem we have today,” he said.
“We have to broaden our sources of recruitment. Recruiting firms have been helpful for us, but we also have to go into schools and universities and get people who are at the early stage of work,” he said.
Between meritocracy and diversity, Mr Hahn said that he would always vote for the latter. Diversity is vital, even for nationally-operated organisations. “This diversity can take a different form, mainly in the form of people who think differently,” he said. “You want to get new ideas, new thinking, you want to be challenged as an organisation.”
“Diversity is also not just about gender and sexual orientation, but also age diversity and having people from different professional and personal backgrounds,” he said. “Our industry is one that deals with all kinds of different professions and industries, so having a nice mix within our organisation will help us be successful.”
Customer centricity thrives on technology
L-R: Messrs Lars Lange, Michael Rellosa, Somporn Seubthawilkul, Jason Tsai and Ms Andrea Keenan
Insurers used to win long-term clients through coverage, limits and premiums, as clients were mostly interested in the financial advantage, said Nan Shan General Insurance chairman Jason Tsai.
Speaking on the panel on customer centricity, he said that cheaper prices would allow an insurer to win over clients quickly and easily, but it was not a sustainable approach, especially if an insurer was looking for long-term, loyal clients.
“The good news is that we can ride on the rapid development of technology today and reshape the idea of product design – from what we sell, to where we sell and how we sell,” he said. “In a sense, we are reshaping the battlefield.”
Many insurers have already taken this customer-centric approach by having more diverse and user-friendly methods of buying insurance and developing more ‘tailor-made’ products. Mr Tsai brought up usage-based insurance and fragmented policies as examples, which would allow customers to deploy their insurance coverage at different parts of their daily life.
Philippines Insurers and Reinsurers Association executive director Michael Rellosa also expanded on the topic, noting that the workforce of today is increasingly made up of millennials and Generation Z – the digital natives. He said that a lot of insurance is about filing – filing the policy application, filing the claim. “Customer centricity is about removing pain points, so the transition to digitalbased transactions makes sense, especially for these digital natives.
“Technology plays a huge part in making this happen and continuing to improve the experience of the customer across the insurance value chain,” he said. “If your organisation can work this into your systems and processes, then you’re already ahead of the curve.”
International Union of Marine Insurers secretary general Lars Lange also said that the ideal client situation is when an insurer can build up expertise and experience, pass on what they have learned to clients to mitigate their risks and insure the remainder of the risk. “That is what our industry is about, no matter what line of business you’re in,” he said.
Thai General Insurance Association president Somporn Seubthawilkul also said that ‘industry disruptors’ such as fintechs and InsurTechs were not actually disruptors. “They are the total opposite to me; they only disrupted the insurers who refused to change,” he said. “But if we truly want to change, instead of waiting for an outside party to come and disrupt us, we have to set up and disrupt ourselves.”
Japan to host 31st EAIC in 2026
Delegates from Japan
Twenty-four years after Japan last hosted the EAIC in 2002, the nation is set to welcome delegates again in 2026. EAIC new board member and Life Insurance Association of Japan director of international affairs Hiroshi Tange said, “We are honoured to host the event in 2026, and look forward to welcoming all delegates. We will be preparing for the conference from now on, figuring out the theme and topics that will be important for the industry for us to cover.”
He also said that the committee will be putting a Japanese spin on the next edition of EAIC, although they are not yet certain what form that will take.
“Japan hosted the first EAIC in 1962, so we are excited for it to return. That first edition started with 140 delegates, and today there are over 1,000 delegates in Hong Kong, and it has expanded beyond East Asia to include participants from all over the world. We intend to build on the great efforts from the other member cities in the development of EAIC and carry on this momentum,” he said.
Mr Tange also said that the committee intends to make positive changes to the next edition of the EAIC to make it sustainable.
Dates and venue of the 2026 EAIC will be announced at a later time.
Strength in diversity
L-R: Mr Candric Cheng, Ms Fiona Harris, Ms Herminia Jacinto, Ms Alice Liang and Mr Patrick Graham
In the increasingly competitive environment of life insurance in Hong Kong, AIA Hong Kong and Macau chief proposition officer Alice Liang said that an insurer needs the right talent and right people to make sure that it continues to surpass its customers’ expectations to deliver a compelling proposition.
“The talent asset is the most sustainable competitive advantage an organisation can have. And when I was building up my team, it was less about focusing on diversity,” she said. “But when I look at filling the roles, I tried to hire individuals that can augment the skill sets that we already had. And that has meant that if you look at my management team, it’s not just gender balanced, they also come from very different backgrounds.”
Insurance Institute for Asia and the Pacific chairman Herminia Jacinto echoed the sentiment, saying that diversity mattered less when compared to talent, experience and education – and as opportunities became more reachable for people across various backgrounds, diversity will come naturally.
Diversity must also encompass more than demographic identity, said Bupa Hong Kong managing director Fiona Harris. “Diversity in backgrounds and experience matter just as much. I’ve been really privileged to work across a number of different functions and disciplines and with many different teams and diverse teams in many different roles. And I’ve also always felt that when you bring a diverse and inclusive team together, you get something that is greater than the sum of its parts.”
Beyond hiring a diverse team, an organisation must also create an environment that is open and fosters diversity in thinking. “Having the right people and the openness culture in the organisation is critical to enable that innovation,” said Ms Liang.
Adapting to new risks
L-R: Mr Christopher Hui, Mr Eric Hui, Ms Chelsea Jiang, Mr Lubomir Varbanov and Mr John Zhu
Starting this week, the Hong Kong stock market will remain open during typhoons as one measure to enhance resilience of the economy, said Hong Kong secretary for financial services and the treasury Christopher Hui.
Speaking during the panel on derisking climate change, Mr Hui said that with this arrangement, Hong Kong is now in line with international standards.
“And at the same time, to ensure not just international investors in Hong Kong, but the global investors in our security, futures and derivatives market, and the investors that are trading in the mainland markets through our Stock Connect programme can also benefit.”
He said that in light of the increasing frequency and severity of natural disasters Hong Kong must be prepared. “We are being very focused in what we should do. On the adaptation side, we have to prepare specific sectors of the economy, including power generation, to be on par with the global trend for carbon neutrality. And specifically on the side of mitigation, we will try to reduce the impact that these natural disasters will have on our economy in specific areas.”
Swiss Re managing director and head of public sector solutions, Asia Pacific Lubomir Varbanov also highlighted the mitigation-adaptation axis and how it is a difficult balance to achieve.
“Much of the public discourse when it comes to net-zero energy transition, quite rightly, has been focused on mitigation. But our view is that at this point, it’s incontestable that some climate change has already taken place, and therefore we need to recalibrate our efforts.”
According to him, adaptation is simply a question of how people can continue to live comfortably in a world that is warming and a world where extreme weather events are happening regularly. “This polycrisis calls for a different kind of solution and a need to have public private partnerships, because absent an adaptation in approach, if nothing happens, rates will go up on the street simply to match the increased use.”
What is needed is active adaptation and risk management to lower the insurance costs for protected assets. “And we could, I believe, get into a virtuous circle where we, as insurers and reinsurers, take on certain elements of risks that we are best placed to do,” he said.
“In doing so, whether it’s Nat CAT risk, political risk, supply chain disruption risks, we can provide more comfort to investors, which means very practically, specifically lowering the cost of capital, which in turn allows some of these adaptation projects which are so critically needed to go ahead.”
AXA General Insurance Hong Kong chief technical and innovation officer, greater China Chelsea Jiang said that bringing the customer along during the adaptation process is another challenge. “People feel the rain and the wind and the floods, but do they truly understand what the future looks like?” she said.
“If we don’t accelerate the pace of adaptation, we’re just going to see a worsening trend of natural disasters and climate related losses. We need to bring this understanding to our customers, to work with governments and regulators to help our customers understand the risk they face, and how that is going to change over time so that they can prioritise and focus on the different adaptation measures that they should take.”
Mr Hui also said that collaboration between government and the private sector must result in tangible projects. “I think it’s important in a sense that people know that it’s something that is really coming and it’s something they can relate to,” he said.
“We also have to ensure that there is a certain degree of public participation, because no matter how moral or how polemical we can be about our green agenda, with Hong Kong being a financial centre, people are very practical in terms of how they see things,” he said.
Collaborating towards sustainability
L-R: Mr Butch Bacani, Mr Clement Lau, Ms Orchis Li, Mr Masayuki Tanaka and Mr Edward Moncreiffe
True sustainability implies intergenerational equity, said United Nations Principles for Sustainable Insurance (UNPSI) programme leader Butch Bacani. “It’s development that meets the needs of the present, without compromising the needs of future generations. So, if you believe in sustainability, you must believe in intergenerational equity, not just this generation, but future generations as well.”
He also added that sustainability is ultimately social and that the interconnectedness of the environment, society and the economy must be made clear to everyone. “However, Asia is disappointing when it comes to collaborating in this regard. With the region being the world’s most disasterprone region consistently over the years implies that Asian insurers should be collaborating really well on a number of fronts - on resilience, on health risk prevention, on decarbonisation, on reversing nature loss. That’s not happening when compared to your peers globally,” he said. “Asia’s participation in the various UN frameworks is totally disappointing when it should be championing this idea.”
However, he also said that the ‘tiger is waking up’, pointing out that insurers across Japan, South Korea, China, Hong Kong and Singapore were firm supporters of the UNPSI, and time will tell if Asia can meet the challenge.
EAIC secretary general Masayuki Tanaka said that Asia must also focus on sustainability literacy. From a business standpoint, he said, many managers find out about the projected temperature rise in 2100, but they do not know how to respond to that information. “You need intermediaries to translate the scientific information to normal words that everybody can understand, which businesses can then use to make decisions,” he said.
“The insurance industry must then also contribute to the education of the public when it comes to sustainability, which will also lift the status of the industry,” he said.
Some insurers have also noted the challenges in meeting increasingly demanding sustainability reporting requirements coming from regional bodies and local regulators. Hong Kong Insurance Authority executive director Clement Lau said that in Asia, there has been some harmonisation of regulatory requirements, especially in the field of standard setting.
“We all know that the ISSB standards, for example, which were promulgated last year, did not just come from nowhere, but were premised on a number of pieces of previous work, such as the TCFD recommendations and the Sustainability Accounting Standards,” he said.
“As things evolve, regulators and standard setting bodies see the need for harmonisation. The IA participates in a number of international and also regional forums. I think what we can do is induce more discussions among the regulators in these forums, with regard to the latest development in terms of the standard setting and, and of course, we need to work closely with the standard setting bodies.”
Gen Re general manager, Hong Kong Orchis Li pointed out that an often-overlooked part of sustainability lies in the medical field. With medical inflation rising all over the world, and life expectancy rates climbing – especially in Asia – insurance prices might become quickly unaffordable in a few decades.
“Healthcare is an especially difficult and complex issue because it involves a lot of stakeholders. We need the government to come up with policies. We need the regulators to regulate the insurance industry,” she said.
Alongside the medical professionals, there are also health technology companies, patient groups and the patients and policyholders themselves. “Basically, everyone has a part in this. And it’s not the insurance industry alone that can solve the issues, no matter how much we innovate and adapt to customer needs and demands,” she said.
Mr Lau also pointed out that in developed markets such as Hong Kong, affordability of healthcare is the main issue, but in developing nations, accessibility is the focus.
This is where insurers have a strong lever to pull, said Mr Bacani. “It’s not just the protection gap, it’s health risk prevention, two things that are mutually reinforcing. The more you’re able to reduce risk, the more you can make insurance more accessible, affordable and sustainable,” he said.
Source: asiainsurancereview.com
Comments