Recent Trends in Asian Insurance Market
In the financial services market, the people’s needs for the insurance solution are evolving in hastier than its banking counterparts. Back in the early decades of the 17th century in London modern insurance business originates from the marine industry. Since then the nature, classes, and coverage of the policy fundamentally change in line with improved risk perception of the people.
The technological advancement in the international communication and transportation sector has influenced the insurance industry a lot, followed by the governmental regulatory frameworks mostly passed in the last two decades. Thus the risk landscape has turned to a new outlook which virtually requires a sophisticated approach as well as innovative insurance solutions in managing those risks. Nowadays the customers prefer tailored-made insurance policies to address the changing needs in their way of life. The insurers are leaving no stone unturned in meeting customers’ requirements.
To keep abreast with the insurance markets of the USA, UK, and other European countries, the insurers in Asian markets have also been tweaking and touching up their terms, conditions, exclusions, and wordings of the policies so as to provide customers with the tailor-made insurance products.
Let’s delve into the new trends taken places in some of the Asian insurance markets in the last three year (2012-2014).
- Philipino Trends:
Microinsurance offers the variety of tailored insurance covers for the low-income families at a minimal premium cost. It aims to bring the uninsured community under the coverage of insurance. Migrant workers’ insurance provides comprehensive coverage for the migrant workers who receive benefits in the events of accidental death, bodily injury and partial and/or total disability, medical evacuation and repatriation of remains.
2. Sri Lankan Trends:
The increasing number of natural disasters has been plaguing the market. Almost all classes of insurance policies such as Fire, Motor, Marine, Miscellaneous, Travel, Health, Title, Car have successfully been sold through Bancassurance. Online premium payment and online policy underwriting mechanism via agents and brokers have gained enormous success. No direct policy is sold online in the Sri Lankan market.
3. Nepalese Trend:
Corp insurances, livestock insurances, Fishery insurances, Vehicle third party insurances have been introduced as the need-based products in 2012-2013. Crop and vegetable insurance are introduced in the Nepalese market on the basis of investment made by the farmer in the particular crop while livestock will be done on the basis of the price of the animal or bird in question. Farmer is to pay the premium in installment on the evaluation period carried out by the officers of the Department of Agriculture and Livestock Services.
4. Indonesian Trends
Credit insurance-both domestic trade credit and bank credit insurance are becoming popular. The main features are coverage for credit defaults by buyers and debtors. Microinsurance covers for personal accident, sickness, and fire. Main features are simple administration, affordable prices, and quick claim payment. The massive low-income market is the target of the products. Bancassurance mechanism has been made use of in the following areas: Personal accidents, Health insurances, Property mortgage insurances, and Consumers’ good (gadgets) protection such as the laptop, mobile phone. But no successful internet marketing products for insurance has so far been done in the Indonesian market.
5. Indian Trends:
Kidnap, ransom and extortion insurance cover, cybersecurity insurance cover, Weather index-based insurance products have recently been introduced in the Indian market and seems to gain popularity. Bancassurance in India has experienced as a remarkable growth rate of 25%-30%. The increasing popularity has been observed in bank loan linked product-home loan, transport loan, industrial loan, educational loan, small loan/micro insurances whereas deposit linked products-personal accident cover, health cover, package cover(the shopkeeper and household policies) have succeeded in term of market penetration.
The delegates from the aforesaid Asian countries have expressed their promising market trends in a seminar on “Principles and Practice of Reinsurance” organized by Asian Reinsurance Corporation at Bangkok in Thailand, held on 17-21 November 2014. I along with four participants of Bangladesh team including Md Kuddus Khan, Member, IDRA have witnessed the curiosity among the participants from 11 countries of the envious blooming of the our takaful market because the penetration rate of Takaful (Islamic Insurance) in Bangladesh has advanced fast and stood 9th position in the world ranking with US Dollars $174.9 million in terms of premium income.
6. Bangladesh Trending
Quite recently the inclusions of Hajj Insurance, Microinsurance, healthcare related insurance, travel insurance, need-based takaful insurances in the product line, have contributed notably to boost the market status. Insurance experts cherish the optimism that the introduction of the following customer-focused insurance products in Bangladesh can definitely make a difference as has been experienced in the Takaful sector.
Weather Index-Based Crop Insurance in Bangladesh has been undergoing as a pilot project financed by Asian Development Bank.
- MIGRANT WORKERS’ INSURANCE
From 2009 through 2013, a total of 2,459,093 workers left Bangladesh to 159 countries of the world and in return, they remitted to BDT 464,747 cores. In 2013, 56400 women workers have successfully been employed overseas. The employment experts view that our migrant worker should without delay be brought under the coverage of social insurance. As the number of female workers has been increasing day by day who needs health and healthcare services mainly because they scarcely benefit from the medical facility while working aboard. Above all they have no control of their working timings and locations, thus increasing the hazards to their health and lives. Truly speaking, this policy addresses the assumed responsibilities of a welfare state to the earners of remittance, the nation builder.
- CROP INSURANCE
The agriculture sector contributes 19% to our GDP (Gross Domestic Products) in 2013. So, it is the insurance protection that can ensure the stable contribution of the agriculture sector. From the unforeseen events such as flood, cyclones, drought, and other natural calamities, the crop insurances protect the farmers and ranchers. The catastrophic nature of crop insurances is to be actively taken into accounts by the insurers. The pools can be set up to make sure the availability of coverage.
- LIVESTOCK INSURANCE
The introduction of livestock insurance can be a milestone both for the insurance industry and the farmer community as being seen in the Indian market. The livestock insurance tends to protect the interests of the owners of the animal firms providing a lump sum benefit to the policyholder if an animal listed in the policy schedule dies from one of the perils specified in the insurance policy.
It has become the recognized sales channel for insurance products through establishing the business relationship between a bank and an insurance company for utilizing bank’s sales points and customer bases for selling insurance products to the bank’s customers. The concept is new in our market but most popular in India, Pakistan, and Malaysia.
- CONSUMER GOODS (GADGETS) INSURANCE
Gadgets are products bought for consumption or use and can be seen in the store. The example includes clothing, electrical equipment, mobile phones, food items, jewelry, and automobiles. As the number of consumers is increasing, the need for insurance is a must if the importance of it is publicized duly.
- CYBER SECURITY INSURANCE
The insurance covers the risks of virus attack, data breaches, business interruption, and network damage. According to the Center for Strategic and International Studies, the financial cost of cyber attack is a risk deserving special notice by the corporate companies because the target’s data breach cost the companies $146 million in 2013(Source: Internet).
In fine, as the nature, frequency and severity of risks always change, insurance being a tool for managing risks, needs to be optimized in parallel to varying degree of risks. So, the introduction of newly devised customer-focused insurance products in Bangladesh can be a catalyst to its burgeoning trends, ensuring, for all and sundry, the secured standard of living and peace of mind.
The contents of this post have been adopted from the writer’s visit to the Asian Reinsurance Corporation.
Thanks for reading!!!!