Insurance industry in Asia to see higher penetration rates: official

 

Tuesday, Oct 20,2009, 8:42:06 PM   Click:

The prospects for insurance rates higher penetration in Asia remains positive despite the impact of global economic slowdown, said a senior Malaysian bank here Tuesday.

The insurance industry in Asia is seeing tremendous opportunities for the strong prospects for economic recovery and rising domestic consumption in the region, Governor of Bank Negara Malaysia Zeti Akhtar Aziz told Federation 21 Afro-Asian Insurers and Reinsurers Conference.

Zeti said that emerging economies, particularly Asia, have shown a high degree of resilience which should lead the recovery of the world.

Meanwhile, financial intermediation in most emerging economies has remained uninterrupted and continued to support domestic economic activity, "she added.

However, she noted, it is time for emerging economies to establish a balance between development strategies based on the outside and strengthening domestic demand so as to keep away from excessive dependence on exports.

Domestic demand in Asia are well supported by positive demographics, rising incomes and expanding affluence supported by low levels of unemployment and inflation, continued access to financing and higher savings rates, Zeti said.

More domestic demand has already led to the emergence of a sector of modern retailing in the region, which will certainly benefit from the insurance industry here, "she said.

The savings rate in most Asian countries exceeded 30 per cent of their gross national product, "she added.

Moreover, the changing priorities of the growing population in the region, consisting largely of a young workforce in the middle income group, have also increased the demand for investment and related products wealth management, "she said.

In 2008, insurance premiums accounted for 5.95 percent of GDP in Asia compared to 7.29 per cent in America and 7. 46 per cent in Europe.

Nevertheless, the global financial environment continues to suffer from high volatility, which continue to pose challenges to the insurance industry in the region, Zeti cautioned.

She said that maintaining capital reserves solid and sound risk management even more imperative to ensure the continued resilience of the industry.

She also called for cooperation between industry players in this field, saying it could help bring the insurance industry to the next frontier.

The week-long conference beginning here Tuesday will offer a platform for more than 600 insurance experts and insiders of Asia and Africa to discuss and resolve issues facing the insurance industry in financial turmoil World.

The conference was first launched in 1964 to promote cooperation between the insurance and reinsurance in Africa and Asia by the regular exchange of information and expertise.