Lord Peter Levene, Chairman of Lloyd’s, reminded an appreciative audience in Singapore that “Asia is an exciting place to be right now. Its expertise and knowledge, combined with its vast population and low operating costs have led economists across the globe to predict that this region will become the dominant force in the 21st century.”
But he also admonished them to beware of becoming complacent, indicating, “I am not here today to talk not about the region’s opportunities, but its challenges. After all, if you want to move forward, you have to understand and deal with the things that could get in your way.”
Levene singled out five key challenges that, “in my view, sit at the very heart of the Asian insurance industry.” He identified them as follows:
— The regional challenge – He warned against thinking only of China and India, noting that many other Asian countries are also experiencing significant growth. The “first challengef or the insurance industry,” Llevene said, “is to ensure that the world, and the global insurance market, knows there is much more to that growth than just two countries.”
— The regulators challenge – He urged strong, but fair regulation, indicating that in an “ever more globalized marketplace, the challenge for Asian regulators is to ensure that their standards are harmonized, efficient, and fair. Doing so will help all insurers and reinsurers provide their specialist services throughout the region, creating fairer competition, and the best deal for customers.”
— The broker’s challenge – Levene expressed satisfaction at their growing role, but indicated that “the key challenge remains to convert growing awareness of their services into real business.”
— The Lloyd’s challenge – He noted the various initiatives Lloyd’s has undertaken in China, India, Malaysia and elsewhere in Asia. However, he pointed out that the threat of natural disasters is a major concern in the region. As a result, Lloyd’s foresees “demand increasing significantly for specialist liability, property risks, and business interruption,” as well as increased demand for marine cargo, product liability, and Directors and Officers and Professional Indemnity. Lloyd’s is committed to maintaining its Leading role in the development and distribution of these products in the Asian market.
— The industry’s challenge – Centers on efforts to control the cycle to the extent that insurers can raise their returns on investment to the level of other major industries. “In the past, insurers have simply accepted the insurance cycle, seeing it as a necessary evil that is part of life in the industry,” Levene stated. “But that is simply not the case. At Lloyd’s, we believe that insurers today have all the information and tools they need to manage the cycle much more effectively.” He detailed Lloyd’s suggestions as to how this might be done, but refrained from making the rather pertinent observation that simply because the tools may be available, doesn’t mean they’re going to be used.
In conclusion Levene stressed that “Asia is an extremely important and rapidly developing market. It looks like the 21st century is going to belong to you. But with such rapid expansion there are challenges for everyone involved. We all have a role to play to meet those challenges and make sure the whole region benefits from the wealth of opportunity its current growth brings.
“We need to ensure that there is a level playing field across Asia, that all international markets fully understand the entire region’s needs, and that the added value of the broker-led system is fully realized. Also, international insurers like Lloyd’s must ensure that we stand ready to support this growth, providing the right products, along the right lines of business, at the right time.
“It’s not easy – insurance hardly ever is – but as the philosopher Joshua J. Marine said: “Challenges are what make life interesting; overcoming them is what makes life meaningful.
“I look forward to working with all of you to overcome the challenges I have set out today.”
The full text of the speech is available on the Lloyd’s web site at: http://www.lloyds.com.
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