AN integrated Association of Southeast Asian Nations (Asean) Economic Community (AEC) in 2015 will be an opportunity for global insurance players to increase their penetration rate in the region, insurance regulators said.
According to Evelina Pietruschka, secretary-general of the Asean Insurance Council (AIC), the integration will benefit both the developed and developing markets.
“Insurance from developed markets can tap the opportunities of the growing markets, while those from developing markets can benefit by speeding up the learning curve and coming up with innovative ways to compete and respond to consumer needs,” Pietruschka said in a speech during the AIC Roadshow Presentation on the 2015 AEC Integration Plan held on Wednesday.
The AIC secretary-general said that the Asean integration is actually a good opportunity for insurance players to maximize their penetration in the Philippines and in the entire region.
“I think the one that would benefit the most for the integration is the consumer and also the provider,” Pietruschka said.
“I believe that all the insurance companies have a duty to provide protection to every individual in the Asean region. So we have actually work to do to be able to penetrate the market,” she added.
However, Pietruschka admitted that unlike the European Union, a single insurance market for Southeast Asia would not be quickly achieved.
“Penetration rate differs across Asean countries, but it is actually very low among the Asean countries as a whole,” she said.
The AIC secretary-general noted that while the Asean population is about 600 million, the contribution of the insurance industry to the region’s gross domestic product, or what is known in the industry as the penetration rate, is only 4.2 percent.
She cited the need to increase awareness among insurance regulators and players to the AEC blueprint. This would ensure a good implementation of its regulations, paving the way for an increase in the insurance penetration rate.
Pietruschka said that local insurers should see to it that they have in place the right platform, personnel, and products.
Meanwhile, Commissioner Emmanuel Dooc of the Insurance Commission said that all the factors that will promote the growth and development of the industry in the region are present in the forthcoming launch of AEC.
These factors include a booming economy, flow of investments, a rising middle class, increase in domestic consumption, increase in population, low insurance penetration rate, and increase in awareness in the value of insurance.
“Our opportunities therefore are great, if we can develop products which can compete with other financial instruments,” Dooc said.
“All the ingredients to promote that growth and development of the industry are present, and we will have no one to blame if we fail to take advantage of the conducive business environment in the Asean region,” he added.
In the Philippines, Dooc said the insurance sector is expected to become a trillion-peso industry in the next 12 months.
The official said that if the present trends continue, the insurance industry would become a major pillar of the Philippine economy.
“We will target to increase our contribution to GDP which currently stands below 2 percent and that is already a significant improvement in previous years where our penetration rate is only 1 percent,” he said.