Life Insurance in Asia Sustaining Growth in the Next Decade by Stephan Binder;Joseph Luc Ngai

By Stephan Binder;Joseph Luc Ngai

The Asian lifestyles coverage is really coming into an inflection element. Coming off mammoth development from the previous a number of years, the has suffered vastly, in addition to the remainder of the monetary undefined, within the 2008 monetary situation. such a lot lifestyles insurers throughout Asia have misplaced great worth within the wake of the obstacle; a number of are in major misery. it will be important to not lose sight of the longer-term outlook even though: fueled by means of macroeconomic components resembling the emergence of the center classification, excessive mark downs premiums, and the turning out to be have to store and make investments for retirement, Asia's lifestyles coverage marketplace is anticipated to develop at double the speed of the U.S. and eu industry over the following decade. The time now's ripe for insurers to set up local partnerships to entry those markets. This authoritative publication analyses the existence coverage panorama in Asia, together with conventional lifestyles coverage, bancassurance, and so forth. It comprehensively overviews the Asian assurance undefined, in accordance with vast learn supplied through the authors on enterprise possibilities and key luck components. this is often an obtainable but authoritative advisor to a key marketplace chance.

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In China, the main problem is recruitment and high agent churn, especially in the more developed urban areas. Agent income in the major cities has simply not kept up with the rapid wage inflation, resulting in a vicious circle of high turnover, lower-quality recruits, and lower productivity. For example, over the last three years, agent income in Shanghai has been declining by 10– 15 percent per year, against a backdrop of wage inflation of more than 10 percent. 12). Moreover, the design of the traditional agency model in China, with a strong focus on mass-market customers, is not suitable to systematically access the fast-growing segment of middle-class consumers living in the urban centers.

More recently, several changes in the marketplace are posing new challenges for the bancassurance channel. First, banks have increasingly been holding onto their own deposits in the tighter liquidity environment that we have observed in many markets, and are therefore less willing to sell any products that act as a deposit substitute. Given that these products formed the bulk of bancassurance volumes in the past, insurers must come up with new products to sell should they wish to continue using this channel.

Although no timeline has been set yet, the listings of these giant local mammoths will certainly take the Asian insurance investment universe to the next level. Furthermore, the IPO of AIA in 2010 acted as a catalyst for investor interest in the Asian insurance sector by bringing in many first-time buyers and increasing the number of insurancededicated research analysts on the sell side. 8). Not to forget, however, is that the story is still a predominately Chinese one. 9). Although the valuations of these Chinese companies have not been immune to the impact of the crisis, they have seen their market capitalization increase sixfold since their IPOs.

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