Issue No. 22 April - June 2015
Message from the PresidentIndustry Events
Industry News

Message from the President

LIA PresidentLife insurance industry starts 2015 on a good note

For the period January to March 2015, we saw a significant 22 per cent increase in sales of single premium products, totalling S$204.4 million, of which 16 per cent were CPF-funded policies.

In the first quarter of 2015, the total sum assured for new business saw a healthy four per cent increase, totalling S$19.9 billion compared to 2014. In the same period, the industry achieved a total of S$649.4 million in weighted new business premiums, a marginal one per cent dip compared to the first quarter of 2014. 

As at end March 2015, the life insurance industry paid out a total of S$1.41 billion to policyholders and beneficiaries. Of this amount, S$1.23 billion was for policies that matured and the remaining S$175 million was for death, critical illness or disability claims.

On health insurance, approximately one in two individuals in Singapore (2.78 million lives) have health cover with total premiums amounting to S$1.62 billion as at 31 March 2015.

The 12 life insurers offering Direct Purchase Insurance (DPI) products have been receiving queries from the public following the launch in early April 2015.

Starting from April 2015, the five insurers providing Integrated Shield Plans (IPs) are partnering the Ministry of Health (MOH) to provide existing policyholders with information about the distinct yet integrated nature of MediShield Life and the additional benefits from private IPs. The government's request to Singaporeans and Permanent Residents that they update their household information in order to receive the correct amount of subsidies they may be entitled to for the MediShield Life portion closed on 23 June 2015.

LIA Singapore and IP insurers are working closely with policymakers and other stakeholders to ensure that IPs will continue to be relevant and offer value-add when MediShield Life is rolled out at the end of 2015.

Our priority for 2015 is preparing for a smooth implementation of MediShield Life, working closely with the government to further improve public education on health insurance and how MediShield Life and IPs work, and their relationship with one another. We also need to ensure that the entire ecosystem fosters a stronger spirit of collaboration to address industry concerns such as Singapore's rising healthcare costs. This includes policymakers, the insurance industry, healthcare providers and practitioners, as well as individuals.

Khoo Kah Siang

Industry Events

Great Eastern Life's new product launch: Smart Life Advantage 
April 2015

Great Eastern has designed a two-in-one whole-life investment-linked plan, Smart Life Advantage, to meet the protection and wealth accumulation needs of customers.

The plan provides customers greater flexibility to adjust coverage at any time based on evolving needs as priorities and financial commitments change, such as getting married or becoming a new parent. Customers can also tailor their protection by adding supplementary benefits (riders), or select customised product bundles. In addition, Smart Life Advantage policyholders can manage their investment needs via a dedicated accumulation account.

Smart Life Advantage (Brochure Cover)

Smart Life Guarantee offers guaranteed protection step-up with changing life stages
Customers may increase their protection by up to S$200,000 each time without new health-checks at any of the five key milestones.

  • Turning 21
  • Getting married
  • Third policy anniversary
  • Birth of child
  • Legal adoption of child

This includes coverage for Critical Illness (CI) if Smart Critical Care rider is added to the plan.

Flexibility to rebalance coverage as needs evolve
At age 55, the policyholder has the flexibility to reduce Death, Total and Permanent Disability (TPD), Terminal Illness (TI) coverage to zero. With this, the value of the Protection Account can be optimised for other essential coverage such as CIs.

Smart Life Advantage provides greater control and transparency through two separate accounts - all within one policy. The Protection Account provides comprehensive coverage against Death, TPD, TI or CI (optional). 

The Accumulation Account allows the policyholder to potentially grow capital through investment in a variety of professionally-managed funds, for savings or retirement goals. Funds may be withdrawn from this account as and when needed.

Comprehensive protection with multiple riders
The policyholder has the flexibility to complement the basic coverage with protection riders for CI across early, intermediate and critical stages, Personal Accident and Disability Income. In addition, the Premium Waiver riders ensure premiums are waived in the event of various stages of CIs ensuring continued coverage as one recuperates.

Etiqa Insurance celebrates Official Launch in Singapore
17 April 2015

His Excellency and Etiqa's CEO

Etiqa's CEO Sue Chi Kong presents a token of appreciation to His Excellency Dato' Husni Zai Yaacob, High Commissioner of Malaysia to Singapore, at the company's launch on 17 April 2015.

Etiqa Insurance Pte. Ltd. (EIPL) officially launched in Singapore on 17 April 2015 as a company offering life and general insurance. Some 250 employees and business partners combined attended the event at Grand Hyatt Singapore.

The Guest of Honour for the launch event was His Excellency Dato' Husni Zai Yaacob, High Commissioner of Malaysia to Singapore.

The company started its operations in Singapore in 1961 as United General Insurance Co. Sdn. Bhd. In August 2014, Etiqa made its foray into life insurance. On 1 April 2015, the Singapore branch of Etiqa Insurance Berhad completed the transfer of its general insurance business to EIPL.

As part of the company's launch, Etiqa partnered Maybank to pledge $500,000 over three years to provide 3,000 low-income families in Singapore with free personal accident insurance.

The Maybank-Etiqa Family Shield covers the beneficiary and up to six dependent children for two years against injury, permanent disablement and accidental death. Etiqa will underwrite this policy.

In celebration of SG50, each family will also receive a $50 grocery voucher. The programme will be rolled out to the first 1,000 families from the second half of 2015.

Watch Etiqa's corporate video
Watch Etiqa launches in Singapore video

The Zurich Blue Piano Experience - Celebrating SG50 the Zurich Way
24 May 2015
Singapore Botanic Gardens

Zurich Insurance kicked started their celebration for SG50 with The Zurich Blue Piano Experience on 24th May at the Singapore Botanic Gardens. The free concert organised by Zurich featured award-winning Swiss pianist, Nico Brina, who entertained the 3000-strong audience with his lively and energetic renditions of rock 'n' roll hits. 

The Zurich Blue Piano Experience

As a wrap-up for their community activities, Zurich hosted the beneficiaries from the Singapore Cancer Society (SCS) together with their families for the event too and took the chance to presented a donation S$32,600 to the charity. The funds were raised through staff donations and dollar-matched by the Z Zurich Foundation.

The Zurich Blue Piano Experience continues in June and July, where the piano will tour around Singapore, bringing the sound of music to the lion city, featuring surprise pop-up performances by special guests, so be sure to visit Zurich's website for more information on where the next piano tour stop might be.

Tokio Marine Insurance Group Singapore Extends Helping Hand to Ongoing Relief Efforts in Nepal
31 May 2015

In the wake of the devastating earthquakes that struck Nepal in April 2015, Tokio Marine Insurance Group Singapore has raised S$60,000 in financial aid to support ongoing relief efforts in the nation. The funds comprise donations from employees, agents, as well as company contributions through initiatives such as dollar-for-dollar matching and special donations on every issued case in the month of May.

The amount, which will go towards the Singapore Red Cross' (SRC) on-the-ground medical and relief aid efforts in Nepal, was raised through a united effort by the companies and agencies under Tokio Marine Insurance Group Singapore. These include Tokio Marine Asia (TMA), Tokio Marine Life Insurance Singapore (TMLS) and Tokio Marine Insurance Singapore (TMiS). The effort was also joined by Tokio Marine Claims Services Asia (TMCSA), an affiliate company under the Tokio Marine Group.

The move reflects Tokio Marine Insurance Group's continuous pursuit of its shared vision as a Good Company, which emphasises the importance of looking beyond profit for the benefit of society.

Chief Executive Officer of TMA, Mr Arthur Lee, said, "Across Tokio Marine Insurance Group, we are committed to a single and shared vision of building a Good Company, which means looking beyond profit for the benefit of society, empowering our people and delivering on our commitments to society. This dedication is reflected in all our employees and agency members across our Singapore network, who have given their generous support in this fundraising effort. Tokio Marine Asia hopes that this donation, a token of our heartfelt sympathies, will be of some comfort to those affected by the Nepal earthquakes."

Chief Executive Officer of TMLS, Mr Lance Tay, said, "This fundraising initiative has inspired engagement and passion in all our employees across Tokio Marine Insurance Group, empowering them to come together in a commendable spirit of selfless giving. At TMLS, we hope that these funds will go some way towards alleviating the challenges currently faced by the people of Nepal, and helping them rebuild their lives."

CEO and Managing Director of TMiS, Mr AK Cher, said, "Beyond this initiative, TMiS will continue to work on building upon a foundation of trust and relationships, by delivering on our commitments to the needs of society. Our deepest condolences go out to the families and loved ones of the victims in the Nepal earthquakes, and we stand in solidarity with the nation during these trying times."
 
The SRC has recently stepped up relief efforts in quake-hit Nepal with disbursement of relief items and emergency supplies, the provision of primary medical and emergency care, and the discussion of possible recovery projects. Tokio Marine Insurance Group Singapore will be donating all proceeds of the fundraising initiative to the SRC and these relief efforts.

Zurich Life Singapore wins again at SBR Awards 2015
11 June 2015
Conrad Centennial Singapore

SBR International Business Awards 2015

We are glad to share the good news Zurich Life Insurance Singapore (ZLS) has clinched the Personal Insurance Award at Singapore Business Review's International Business Awards 2015! This is the second time ZLS won in this category and this year, the submission was based on ZLS's term life protection product, Z Protect-Prestige (ZPP). This win is an affirmation to ZLS on the best practice they have put into designing products with customers in mind. ZPP is ZLS's first multi-currency protection product, designed to be a highly-flexible protection plan that keeps pace with today's affluent and mobile high achievers. To know about ZPP, click here

Amongst the pool of winners were reputable local and international businesses, including Sembcorp Marine, Abbott, Singtel, SPH, amongst many others, all of whom clinched awards for the respective trades they represent. The winners were selected by an esteemed pool of judges including:

  • Henry Tan, Managing Director of NEXIA TS
  • Choo Eng Chuan, Asean Markets Leader at Ernst & Young
  • Ernest Kan, Chief of Operations, Clients & Markets at Deloitte and
  • Toh Kim Teck, Assurance Partner, Foo Kon Tan LLP

Read the press release of the awards and event here

Manulife Singapore wins awards for excellence in customer service and corporate social responsibility
12 June 2015
Hong Kong

2014 International CRE Awards

Manulife Singapore has clinched two awards in the 2014 International Customer Relationship Excellence (CRE) Awards, one of the most comprehensive and respected forms of assessment and recognition in the field of customer services internationally.

Manulife Singapore was named "Contact Centre of the Year - Insurance (Under 20 Seats)" for the second consecutive year. It also received the "Corporate Social Responsibility Leadership of the Year - Insurance" award in recognition of its community and social initiatives.

The International CRE Awards aims to recognise outstanding companies and individuals for their customer-centric innovations and best-in-class practices. It is organised by the Asia Pacific Customer Service Consortium (APCSC), which was established to promote service quality and customer relationship excellence in the Asia-Pacific region.

Naveed Irshad, President and CEO of Manulife Singapore said: "Customer centricity is of utmost importance to Manulife Singapore and we are honoured that our efforts have once again been recognised by the CRE Awards Committee. We are committed to putting our customers at the heart of everything we do, from delivering innovative solutions that meet their financial needs to giving them an excellent experience in all their interactions with us."
 
Mr Irshad added: "While serving our customers with pride, Manulife is also a firm believer in giving back to society. Through our support of the SwimSafer programme, we are working hand in hand with Sport Singapore to promote greater awareness in the community about water safety. As we celebrate 35 years of serving the people of Singapore this year, this strong affirmation from APCSC will inspire us to redouble our efforts and continue doing our best for our customers and community."

2014 International CRE Award Trophies

Manulife Singapore won awards for customer service and corporate social responsibility in the 2014 CRE Awards.

Advanced Notice
Leadership And Management Programme (LAMP) Asia 2015
9-10 July 2015
Hong Kong

Aging global population, growing middle class in developing nations, workforce shifts to Generation Y are trends shaping the needs of the insurance and financial services industry. Training needs for insurance professionals are constantly evolving and agencies need to stay competitive and effective in recruiting, training and retaining top talent.

"The industry has focused a lot of energy in getting professionals to acquire skill sets that sold products. In other words, how to sell. More emphasis should be put on why they sell and the important impact on individuals, families and the society as a whole. This really resonates with Gen Y" said former Metlife Senior Vice President and now industry motivational speaker Joseph Jordan during a recent interview with Asia Insurance Review. Mr Jordan observed that the industry has been spending too much time on analytical skills and promoting individual careers so the professionals can earn more money. "It is also important to not only know what people want to know but also how they feel about it. Feeling is a big part of it. That is why training and development is key," he said.

LAMP Asia 2015

LAMP Asia 2015, the second edition of the LAMP conference in Asia, aims to address such relevant and industry-leading issues faced by the industry, and equip agency leaders with fresh insights into the areas of recruitment, training, social media and marketing. The conference will take place from 9-10 July in Hong Kong featuring prominent international and regional speakers:

  • Ed Deutschlander (past president of GAMA International) CEO elect of North Star Resource Group, one of the America's largest and oldest privately-held independent financial advising firms, and a recruiting legend;
  • Athan Vorilas, GAMA International Master Agency Award winner and president of Lighthouse Financial Network, LLC;
  • Richard Weylman, Best-selling author and marketing consultant to the financial services industry;
  • Clara Shih, founder and CEO of Hearsay Social, who has also been named one of Fortune's Most Powerful Women Entrepreneurs, Fast Company's Most Influential People in Technology, and Businessweek's Top Young Entrepreneurs;
  • Daralee Barbera, Managing Principal of Waddell & Reed, awardee of the GAMA Platinum and Gold International Management awards for financial planning;
  • Bonnie Godsman, GAMA's first and youngest female CEO;
  • Sheng Lee, veteran professional trainer and the founder of Exceptional Performance Consulting;
  • Guo Jie, Agency Director at Ping An Insurance Group, Platinum awardee of Top Sales at Ping An for three consecutive years;
  • Krits Pitimana-aree, Executive Director of Jakkawal 22 K AIA Thailand, and also a 10-time awardee of Manager of the Year by AIA.

"At LAMP Asia 2014 we were just getting started," said GAMA International CEO Bonnie L. Godsman. "But LAMP Asia '15 is going to be even bigger and better. Collaborating with our Asia Advisory Committee, your leaders and I have spent months preparing and will once again connect you with a variety of valuable resources, peer networking opportunities and highlight GAMA's suite of products and services."

Paterno Abellera, President of GAMA Philippines shares more about his thoughts on LAMP Asia, "LAMP Asia is a great opportunity for me to hear best practices and proven methods from international top leaders. The tips on improving recruitment, selection and retention strategies are indeed practical and useful. I've also enjoyed exchanging ideas on how we can improve our practices with agency leaders from other countries."

This year, LAMP Asia will be held in Hong Kong, one of the key financial hubs in the world. "People in Hong Kong enjoy life-long learning and we are happy that LAMP Asia will be coming to Hong Kong this year," said President of GAMA Hong Kong, Duncan Lee.  "In fact, the life insurance professionals are one of the best qualified among all sales oriented industries in Hong Kong. Delegates can look forward to experiencing an insightful conference this July with programs that are both diversified and practical."

Attendees for LAMP Asia 2014
Delegates having a fun time at LAMP Asia 2014 in Kuala Lumpur, Malaysia.

"I've enjoyed the sessions at LAMP Asia 2014, the speakers were motivating and reenergising. This is a conference that all agency leaders should be part of!" - Stephen Chew, Manulife Singapore, Attendee of LAMP Asia 2014

"Enhance your team performance 5X and boost your motivation in a fun and friendly environment. If you want to build a strong financial services team, LAMP Asia is an event you cannot miss!" - Proudpimol Puripongtasana, Allianz Thailand, Attendee of LAMP Asia 2014

About GAMA International

GAMA International Logo

As the premier organisation for field leaders in the insurance, investment and financial services industry, GAMA International is your dedicated source for cutting-edge, skill-building professional resources and the conduit for learning from the top field leaders of the industry.

Join GAMA and increase your worth through innovative tools and resources that foster new methods and skills to increase production and team development. Learn about critical business topics such as new industry trends, recruitment and selection processes, community marketing techniques and productivity and accountability methods.

GAMA Asia Pacific Office
Email: membership.asia@gamaweb.com
Phone: +65 6496 5509

Industry News

LIA Guidelines issued

31 March 2015

1 April 2015

20 May 2015

Introducing new LIA Member, St. James's Place International (Singapore)

Andy Sumner - SJPI Principal Officer

St. James's Place International (SJPI) is a Dublin-based and Irish-authorised insurance company within the St. James's Place Plc Group and in January 2015 has been granted a Singapore life insurance licence by the MAS. St. James's Place Plc is a FTSE 100 financial services group and is well established as one of the UK's leading wealth managers.

SJPI has been operating for over 20 years and when looking to continue our growth by expanding into international markets it made sense to consider where our approach and expertise would be appropriate. We feel the UK expatriate community in Asia offers this opportunity and operating in a highly regulated and sophisticated market such as Singapore, which shares many similarities with the UK, is indeed a good place to start this journey.

The life insurance industry here in Singapore is going through what we feel are some very positive changes and we see a number of similarities with the evolution of the industry in the UK in recent years. Whilst the growth of the business will be steady, we will look to use some of the lessons we have learnt to, over time, introduce products that represent true value for money for the client. - Andy Sumner, Principal Officer

ASEAN Banking Council Meeting
12 June 2015
Singapore

ASEAN Financial Integration: Where Are We, Where Next?
Keynote Address by Ravi Menon, Managing Director, Monetary Authority of Singapore

Dr In Channy, Chairman, ASEAN Bankers Association
Mr Samuel Tsien, Chairman, Association of Banks in Singapore

Ladies and gentlemen, good morning.
 
ASEAN banks have performed well over the last two decades since the Asian Financial Crisis. Asia's economies and financial systems, including those in ASEAN, generally held up well during the Global Financial Crisis.
 
The near term economic outlook for ASEAN will be shaped by two themes: the ongoing recovery in the G3 economies and the slowdown in the Chinese economy. Barring shocks, overall growth in ASEAN should remain firm this year, at about 5%, not spectacular but very respectable considering the state of the global economy.
 
Macroeconomic conditions are therefore supportive of banks in ASEAN. There are, however, downside risks they need to watch.

  • The divergence in monetary policy settings among the G3 economies could pose risks to financial stability that could also potentially hurt growth.
  • The anticipated normalisation of interest rates in the US against continuing quantitative easing in the Eurozone and Japan is already causing sharp movements in exchange rates and bond yields.

The scenario of a "double whammy" posed by a rise in US interest rates and a strong US Dollar could expose vulnerabilities among some ASEAN borrowers.

  • Banks in the region could face higher non-performing loans. They could also face reduced US Dollar funding if there are large capital outflows from ASEAN.
  • But their liquidity and capital positions are generally sound and they should be able to weather this.

ASEAN Growth Story Still Good
Over the medium to long term, ASEAN is expected to remain among the fastest growing regions in the world.
 
Last year, the combined GDP of ASEAN was close to US$2.5 trillion--larger than India. 

  • The ASEAN-4 - Indonesia, Malaysia, Thailand and the Philippines - are projected to grow by at least 4% per annum on average over the next five years.
  • It could be as high as 6% if ASEAN becomes more integrated and these countries successfully implement structural reforms to raise productivity and competitiveness.

For banks in ASEAN, it is not just the size and growth of the economies that matter. It is the composition of that growth and demand.
 
Rising incomes and the agglomeration effects of urbanisation will significantly expand the ranks of the middle class in ASEAN.

  • In 2010, ASEAN had a population of 600 million, with around  a quarter making up the middle class.
  • In 2030, ASEAN will have a population of 700 million, with about two-thirds attaining middle class status.
  • In other words, the size of the middle class will swell by as much as three times over two decades.

This rapid expansion of the middle class in ASEAN will spur demand for a wide range of goods and services.

  • Services such as telecommunications, education, healthcare, and banking and finance, have a high income elasticity of demand.
  • This means that as incomes rise and wealth accumulates, the demand for financial services - be it consumer credit, wealth management, or insurance - will rise more than proportionately.

This phenomenon is being demonstrated right now, as it has been over the last few years, and will continue to play out in the next few decades as ASEAN continues to grow.

Economic and Financial Integration to Sustain Growth
Besides domestic structural reforms, a key factor to sustain ASEAN's rate of growth closer to 6% than 4% is economic integration.

  • A key vehicle to achieve this is the ASEAN Economic Community (AEC).
  • The AEC, as you know, was adopted in 2007 by ASEAN Leaders as a blueprint to achieve a free flow of goods, services, investments, and skilled people within the region by 2015.

We have achieved substantial progress in implementing the AEC Blueprint.

  • More than 90% of the key deliverables targeted for completion by 2015 have been implemented.
  • Virtually all goods traded within ASEAN are at zero tariff.
  • There are agreements in place to enhance protection for investors, liberalise sectors for investment, and provide greater transparency on investment rules.

Financial integration is a strong complement to trade integration and a critical component of the overall AEC project. Deeper financial integration will yield substantial benefits for ASEAN economies.

  • It will support economic growth by helping to mobilise surplus savings more efficiently and channelling them to productive investment opportunities in the region.
  • It will strengthen resilience to external shocks by helping to deepen and broaden capital markets.
  • It will promote financial inclusion by helping to expand the reach of financial services to a wider community that is currently under-banked and under-insured.

The ASEAN Financial Integration Framework (AFIF), adopted by ASEAN Central Bank Governors and endorsed by ASEAN Finance Ministers in 2011, envisages a more integrated financial region by 2020.

AFIF sets out the following key thrusts:

  • remove restrictions to the intra-ASEAN provision of financial services by ASEAN financial institutions;
  • build capacity and infrastructure to develop and integrate the ASEAN capital markets
  • liberalise the flow of capital across the ASEAN region
  • harmonise payments and settlements systems
  • strengthen capacity building, regional financing arrangements, and regional surveillance

The pace of financial integration has, however, lagged behind trade integration. In part, this is deliberate. In part, this is disappointing.
 
The slower pace is deliberate in the sense that financial integration is more complex than trade integration and requires more time.

  • Liberalising access to financial services is not as straightforward as reducing numerical tariff rates on particular categories of merchandise.
  • Financial liberalisation involves addressing issues of harmonising regulatory standards, market conduct practices, disclosure requirements, and conditions of licensing.

More so than in trade integration, financial integration requires a certain degree of convergence in the development of financial markets in the respective economies. The financial systems across ASEAN are at very different stages of development and sophistication.
 
Unlike the goods market and most services, financial liberalisation and integration must pay close heed to issues of systemic stability. A key lesson from past financial crises is that premature opening up of financial markets without strengthening domestic financial systems and establishing credible safety nets can have painful consequences.
 
While there are good reasons why financial integration has been slower than trade integration, one cannot help but think that progress could have been faster than what we have seen to-date.  In that sense, the pace of financial integration is disappointing. ASEAN Finance Ministers and Central Bank Governors are therefore determined to make up for lost time and press ahead with liberalisation in the post-AEC phase leading up to 2020.
 
While the pace of financial integration has not been as fast as we would have liked, it is important that we recognise the progress that has been made and the opportunities that have been created. Let me now touch on the progress and prospects for integration in banking, insurance, and the capital markets respectively.

Banking Integration
In banking, the key achievement is the establishment of the ASEAN Banking Integration Framework (ABIF).

  • ABIF provides a platform for Qualified ASEAN Banks to enjoy greater market access and operational flexibility.
  • Banking liberalisation under the ABIF can be done on a bilateral basis and customised accordingly.
  • Two ASEAN countries can agree on specific areas to be liberalised based on the Qualified ASEAN Banks' commercial interests.

ABIF will complement the broader economic integration of ASEAN.

  • As ASEAN economies develop further, their corporates will expand their operations into the region.
  • The banks who have been servicing these corporates in their home markets are well placed to follow their customers and support them as they regionalise.
  • ABIF will provide them an enhanced vehicle to do so.

More importantly, ABIF will be a vehicle to help grow a group of strong pan-ASEAN regional banks with the scale and the capability to compete alongside the global banks. As ASEAN becomes an economic powerhouse, so must our ASEAN banks.

Looking ahead, a key priority for banking integration will be to help banking groups with operations in several ASEAN countries to share and transmit information across borders.

  • For banks with pan-ASEAN operations, the segregation of data and systems in multiple countries due to data on-shoring requirements may hinder effective group risk management and raise data security concerns.
  • We should harness technology to support the pooling of data in regional and global data centres.
  • Data aggregation will help enhance consolidated risk management and ensure better protection of customer data.

Insurance Integration
In insurance, ASEAN member states have agreed on an ASEAN Insurance Integration Framework.

  • ASEAN members have agreed in-principle to liberalise the cross-border supply of Marine, Aviation and Goods in International Transit (MAT) insurance in the seventh package of financial sector commitments of the AFAS.
  • When this agreement is signed and ratified in 2016, insurance companies will be able to offer MAT insurance across ASEAN's borders.
  • This move will help to lower the cost of insuring cross-border business risks and help to spur intra-ASEAN trade.

The next key steps will be to liberalise the catastrophe insurance and reinsurance markets.

  • ASEAN's insurance penetration rate is barely half the global average, even as the incidence and severity of natural catastrophes in ASEAN continue to increase.
  • This large and widening gap in insurance coverage leaves ASEAN countries vulnerable to economic loss and production disruptions from natural catastrophes.
  • As risk exposures grow in scale, size and complexity, they will exceed the capacity of individual states to underwrite the risks confronting their communities and economies.

Liberalising ASEAN's insurance markets will reduce the cost of insurance protection to governments, to businesses as well as to consumers.

  • The insurance business is premised on the law of large numbers and risk pooling - the wider the distribution of risks, the more cost-effective the cover.
  • It is therefore important to allow cross-border provision of insurance services.

Capital Market Integration
In capital markets, ASEAN has made good progress in integration, starting with Thailand, Malaysia and Singapore.  Concrete measures have been put in place to harmonise disclosure requirements and broaden market linkages.

For investors, the ASEAN Trading Link among Thailand, Malaysia and Singapore provides a single gateway to all three exchanges.

  • This means an investor in one country can buy shares in the other two markets through his local stockbroker.

For issuers, Thailand, Malaysia and Singapore have adopted fully harmonised prospectus disclosure requirements, known as the ASEAN Disclosure Standards.

  • This means an issuer can tap all three markets with a single set of prospectus, yielding greater efficiency and cost savings.
  • A Streamlined Review Framework for such prospectuses is targeted to be implemented later this year. This will shorten the time taken for the issuer to obtain approval for a multi-jurisdictional offering and provide greater certainty on the time-to-market.

For fund managers, Thailand, Malaysia and Singapore have launched the ASEAN Collective Investment Scheme Framework, which is a mutual recognition framework providing fund managers with a streamlined authorisation process for the cross-border offering of funds.

  • This means that a fund manager authorised to manage a fund in one country can market the same fund in the other ASEAN countries.

These are significant steps towards achieving an integrated ASEAN capital market. But they are not enough. In fact, it is like a bridge three-quarters completed. It marks good progress but is not quite useful until it is end-to-end. And end-to-end integration is what we need to fully realise the benefits of our efforts on the capital market front.
 
ASEAN needs to continue enhancing linkages across its markets.

  • We should build on the ASEAN Trading Link among Thailand, Malaysia and Singapore by further broadening and deepening post-trade linkages.
  • Establishing clearing, settlement, and custody links will make the ASEAN Trading Link a full-fledged end-to-end platform across the three ASEAN markets.

And with the progressive participation of the other ASEAN exchanges, we would have created a truly integrated ASEAN capital market - one that will:

  • enhance trading volumes;
  • lower the cost of corporate fund raising;
  • provide investors with more choice and ease of access; and
  • enhance liquidity and stability in the market.

Conclusion
To achieve its potential, ASEAN must integrate further.
 
Economic integration is a win-win proposition. By exploiting economies of scale and strategic complementarities, every country in ASEAN stands to gain.
 
Economic and financial integration in ASEAN owes at least as much, if not more, to the natural functioning of market forces as it does to official initiatives like free trade agreements. Integration in ASEAN, more so than it has been in the European context, is a bottom-up, organic process driven by:

  • trade and investment flows arising from the production networks of global MNCs spanning the ASEAN region; and
  • cross-border capital flows arising from the operations of global and regional banks.

The success of ASEAN financial integration therefore requires active industry collaboration and participation. The industry has an important role to play in working with regulators and governments to identify and clear roadblocks to growing their business across borders.
 
The ASEAN Bankers Association, representing the banking associations across all ASEAN members, is well placed to play this role.

  • Coming from the industry, you know what makes commercial sense, where the specific obstacles are, and you know how to persuade your governments and regulators to press on with economic and financial integration.

I wish you fruitful discussions and look forward to your ideas. Thank you.

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