Asia's insurance to grow twice at the world average
Asia's insurance to grow twice at the world average
KUALA LUMPUR (AFP): The insurance industry in the rapidly- booming economies of Asia is expected to grow at twice the world average, the Malaysian Insurance Institute said yesterday.
The institute chairman, Fong Weng Phak who is also deputy governor of central Bank Negara, said Asia's insurance industry is projected to grow at 10 percent annually, compared to a worldwide growth of only four percent.
The industrialization process in Asia, which accounts for 50 percent of the world's population and some 25 percent of its output, would open up new opportunities for insurers, he said.
"As Asian countries build their infrastructure and industries, they are already a vast source of insurance business for companies which have the capacity and capability," Fong said when opening an insurance seminar.
"The increasing income levels will offer recurring waves of opportunities for insurers," he added.
Fong said the insurance industry worldwide was experiencing fundamental and structural change as a result of liberalization of the financial services industry and globalization of the world economy.
He urged Malaysian insurers to "shape-up" their business operations to survive the more open environment and stave off competition from global players who are highly equipped with capital, technology and experience.
"Malaysian insurers face the formidable tasks of having to complete the catch-up process and to strategize to leapfrog into the more competitive environment of the 21st century," Fong said.
They need to "maximize existing resources, embrace new technologies, develop a creative mindset and have the boldness to explore the new markets," he added.
Insurance experts echoed Fong's view that there was a significant scope for growth in Asia's insurance industry over the long term.
Roger Clements, underwriting director of British-based Royal and Sun Alliance, said recent studies showed Asia accounted for some 35 percent of global insurance business, or some US$750 billion.
"But if we remove Japan's contribution, this then equates to half the world producing less than six percent of world premiums," Clement said.
"Looking ahead over the next 10 years, the Asian insurance industry should have excellent prospects to develop and grow," he said, adding however, the US and Japan would still remain the largest by far.
Going by Asia's lifestyle trend, Clement foresees great potential in health care businesses for the aging, services and infrastructure industries in the region.