Milliman today released its annual ‘2020 mid-year embedded value results: Asia’ report. This update supplements the ‘2019 embedded value results: Asia’ report released in September 2020, and includes 2020 mid-year embedded value (EV) and value of new business (VNB) results posted by major multinational and domestic life insurers across Asia.
“Most companies in the region recorded steady EV growth in the first half of 2020 despite the economic impact of the COVID-19 pandemic,” said Milliman Principal and Consulting Actuary Paul Sinnott. “The growth in VNB was mixed across Asian markets, with new business sales in some markets severely affected by government restrictions in response to the coronavirus.”
A complimentary copy of the report is available for download here.
A few key insights from the report include:
- The China and Japan markets led EV growth in the Asia region with most insurers recording double-digit growth in EV.
- When compared with the first half of 2019, changes in VNB and new business margins in the first half of 2020 were varied. China, which entered and exited lockdown earlier than other Asian markets, was less affected than most VNB, growth-wise. In Hong Kong, the continuing social unrest, restrictions on travel from mainland China, virus-related lockdowns and lower interest rates all contributed to a significant decline in VNB.
- All multinationals disclosing results reported a decline in VNB, which they commonly attributed to lower new business sales, unfavourable economic changes and changes to operating assumptions in key markets.
- The COVID-19 pandemic led to a greater focus on product innovation and digital transformation across the region. Insurers and regulators have taken steps to facilitate digital sales in response to lockdowns and social distancing measures adopted by most governments. This helped insurers in some markets mitigate reductions in sales to an extent.
- The pandemic has also typically increased demand for protection products across Asia.
For more details, please contact Paul Sinnott in Hong Kong at firstname.lastname@example.org.
Despite the ongoing COVID-19 pandemic, this year has seen several positive developments in the Bangladesh life insurance market.
For example, authorities in Bangladesh are currently considering a proposal to permit bancassurance based on an “open architecture” model where banks would have to distribute the products of more than one life insurer. This could go into effect some time in 2021. There is also growing interest in the Bangladesh life insurance market from multinational insurance companies.
To read more about recent developments in the life insurance market in Bangladesh, read this Milliman Asia e-Alert.
COVID-19 and the impact on capital markets pose several challenges for Indian life insurers. Against the backdrop of an already sluggish economy, the onset of COVID-19 has seen the Government of India and the Reserve Bank of India taking further steps to stimulate the economy by announcing a financial package for the poor and vulnerable sections of society and by cutting the reverse repo rate to 4.15% from 4.90% at the start of 2020.
In addition, the complete
lockdown imposed across India due to COVID-19 has clearly had an adverse impact
on new business volumes, especially in March 2020, when insurers typically
write the highest monthly volumes as consumers reach the taxation year-end.
In this Asia e-Alert, Milliman consultants discuss the impact of COVID-19 on capital markets and the challenges it poses for Indian life insurers.
With a strong macroeconomic outlook for the Indian economy, the young population, the large emerging middle class with high savings potential, and the low penetration of life insurance business, the longer-term outlook for the Indian life insurance industry continues to be positive. In addition to the Life Insurance Corporation of India, there are 23 private sector life insurers operating in the market. The sector has grown significantly over the years, achieving a new business annualised premium equivalent (APE) compound annual growth rate (CAGR) of approximately 13% from FY 2001-2002 to FY 2018-2019. Milliman’s Sanket Kawatkar and Heerak Basu provide more perspective in the latest Asia e-Alert.
In October, the Insurance Regulatory and Development Authority of India released draft non-linked and linked insurance products regulations for comments. In this Asia e-Alert, Milliman consultants highlight the key changes proposed in the draft regulations as well as the business implications for life insurers.
Milliman has released its latest report entitled ‘Regulatory diversity across Asia.’ The report is a compilation and insightful analysis of current regulations applicable to life insurers across 14 Asian markets. It provides an analysis of the life insurance regulations in Brunei, China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.
The report includes an overview of the main regulations in these 14 markets, governing the following areas:
• Products and pricing
• Capital and solvency requirements
• Policyholder protection
• Enterprise risk management (ERM)
Understanding the different stages of evolution of the regulatory regime across Asia will help life insurers, and other organisations with an interest in the life insurance industry, get a better perspective and help them in strategic business planning, market entry, mergers and acquisitions (M&A) and cross-border activities in these markets.
A few observations from the report:
• The markets in Asia are still very much ‘rules-based’ (as opposed to ‘principle-based’). Detailed rules and regulations govern different aspects of the industry.
• Regulators are increasingly looking at areas such as customer protection and meeting policyholders’ reasonable expectations (PREs), although these areas are still at a nascent stage in many of the markets.
• There is also an increasing focus on strengthening the governance environment through the Appointed Actuary/Chief Actuary systems and the role of board committees.
• There is a clear trend towards adoption of risk-based capital (RBC) regimes and the enhancement of such frameworks, wherever already adopted.
• The regulations in several markets are changing rapidly.
To read the report, click here.