Asia-Pacific key to global organisations targeting long-term insurance growth, says EY partner
An Ernst & Young (EY) report into the shifting insurance landscape in rapid-growth markets lists Indonesia, Thailand and Vietnam as countries offering valuable long-term opportunities.
In addition to this, Singapore-based advisory partner at EY Russel Lok told GR that Malaysia also had a “good balance between growth prospects and relatively lower risk”.
“The key challenges for all these markets are firstly, market entry is restricted in terms of acquiring a licence (for example, forcing purchase prices up in Indonesia),” Lok said.
“Secondly, navigating the operational environment can be extremely difficult without thorough local knowledge, be it growing distribution channels, finding skilled specialist resources or managing claims.”
EY’s Waves of Change report features a risk-opportunity matrix ranking 21 rapid-growth markets in terms of their future prospects for insurers, based on projected economic and premium growth until 2020, financial stability, regulatory change, macroeconomic volatility, liquidity risk and other factors.
Lok said that China would continue to play a dominant role in driving premium growth in international markets. He pointed out that it remained at the top of the list in terms of opportunity, primarily due to its sheer scale and continued economic growth.
“Even though there is some slowdown, that is only relative to its historic highs,” he told GR.
“Indonesia is also seen as highly attractive in terms of economic growth. The insurance industry in both of these markets is already well established and beyond the nascent stage that other RGMs (rapid-growth markets) are currently at, hence the opportunities are immediate.”
Lok said that Vietnam required a longer-term view of the market compared China and Indonesia, but was still one to watch. He added that Thailand offered intriguing near-term growth potential, with modest risk and strong future growth prospects.
The fact that Asia-Pacific markets featured prominently throughout the report reaffirmed that it had to be “part of any global organisation’s RGM strategy”, Lok said.