Asia's insurance market 'must become borderless'

Asia's insurance market 'must become borderless'

SINGAPORE (Reuter): Asia's insurance market must become truly borderless if the region is to fulfill its potential as one of the world's most dynamic, a senior industry executive said yesterday.

"We have to have a borderless environment to keep the flow of capital into the region dynamic and ensure that the energy of our collective capacity is maintained," said Michael Wee, general manager of the Singapore branch of Yasuda Re.

"We need to have co-operation in terms of lowering tariffs in the region and in creating the right conditions to do business," he told Reuters in an interview.

But Wee, whose company is a unit of Japan's Yasuda Fire & Marine Insurance Co Ltd, said Asia would stop short of creating a European Union-style single passport approach to insurance regulation.

"Asia's integration will not be on the same lines as Europe's because of the different stages of development of the different countries here," he said.

The Association of Southeast Asian Nations (ASEAN) grouping Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, has given its first indications that a single insurance market could be on its long term agenda.

A meeting of ASEAN Finance Ministers in Thailand on March 1 issued a joint statement encouraging "ASEAN insurance regulators to establish an appropriate forum for the purpose of initiating and undertaking various co-operation programs".

Wee said greater openness would be good for the international insurance industry: "Innovation is the result of more open markets. Ideas germinate because of openness which is good for companies and clients."

And the pace of innovation would grow as more underwriting capital was attracted to Asia.

"Innovation is related to capacity. Companies have to find new ways of using capacity to benefit clients as competition grows," Wee said.

Singapore's emergence as the insurance market's Asian hub had helped concentrate attention and capacity in one place which would attract still more over time.

"If you look at the multiplier effect over time, I think the emergence of one center will have been beneficial to the region as a whole," Wee said.

"Singapore has played an ideal role because of its geography, the way it brings international businesses together and because of its openness to trade in this part of the world."