Milliman has released comprehensive new research analyzing the current and future state of the retirement income market in the Asia-Pacific region. The report is based on a survey of over 100 insurance companies and financial institutions across eight countries. The results, along with case-studies and in-depth analysis, provide insight into the economic and regulatory factors most affecting Asian retirement income markets, including consumer demand, product development, and opportunities for growth in the industry.
“Across Asia-Pacific, there is the potential for private market providers to complement and fill gaps that exist from government-sponsored retirement systems and employer-sponsored pension arrangements,” said Richard Holloway, managing director for Milliman’s South East Asia and India life consulting practice. “With this report we’re able to gain valuable insight into opportunities that may exist, on a country-by-country basis, and offer perspectives on ways to capitalize.”
“Technology advancements have now made it possible for financial institutions to provide consumers with tailored investment strategies and product solutions to achieve their goals in retirement. The development of robo-advice has begun to gain traction in the superannuation industry in Australia, and we expect the same to occur in Asia in the near future,” said Milliman Australia practice leader Wade Matterson.
Key findings from the report include:
• The vast majority of respondents feel their national retirement systems’ provisions are inadequate – even those traditionally considered to have more advanced systems such as Singapore and Australia.
• Regarding the most important features in a retirement income product, respondents feel consumers would value some type of guarantee, either income or capital protection, with simplicity being a consistent third across most countries.
• When it comes to financial advice, over 60% of participants felt financial advice was needed but 63% cited cost as the primary impediment for consumers.
Interested parties may obtain a copy of the Milliman study here.
In the past, acquisitions in the European insurance market were conducted largely by European—and occasionally other western—insurers. There was little or no interest from Asian buyers, but this is changing. Asian investors are not afraid of spending their money on the right company. They have the capital western insurance companies need and are willing to invest in their future and deliver better returns than they might expect from domestic markets. This Milliman Impact article provides more perspective.
Milliman co-sponsored the 19th Asian Actuarial Conference earlier in November and conducted a survey on innovation and potential future trends affecting the insurance industry in Asia. Survey participants included actuaries from all of the main Asian insurance markets. To read the key findings from the survey, click here.
Milliman today announced the release of a new research report, “Participating business in Asia: Where do we go from here?” The research highlights strong demand for participating business (par) in Asia, and the challenges it has faced from the recent low interest-rate environment.
“Par business represents a significant proportion of the new business being sold in Asian markets and has been gaining market share in recent years”, said Milliman Principal Richard Holloway. “Following the Global Financial Crisis, we have seen a general shift away from unit-linked products toward par products, perhaps because consumers have come to recognize the value of the underlying guarantees that par offers. With this latest research, we look more closely at the concept of unitized with-profits (UWP) as an alternative product offering for insurers in Asia to consider. UWP has yet to develop a foothold in Asia, but it may be a more appropriate platform for writing par policies in the future.”
The report offers an overview of par business in China, Hong Kong, India, and Singapore before introducing the concept of UWP, which became the main type of par business offered in the UK during the 1990s. It then explores how UWP could be applied in the specific example of the Singapore market, with comparisons to existing products.
To read the entire research report, click here.
The latest issue of Milliman’s Asia ERM Newsletter authored by Michael Daly, Richard Holloway, Sam Morgan, and Wing Wong, features an in-depth update on the China Risk Oriented Solvency System (C-ROSS). C-ROSS, China’s first-generation factor-based solvency regulation system, was put into place in 2007 after four years of preparation. It subsequently suffered from the same shortcomings as Europe’s Solvency I, a similar regime.
In 2012 plans and an implementation timeline were announced for a risk-based capital (RBC) solvency framework in China. Get the latest developments in the newsletter, which also includes a report on a recent RBC 2 industry round-table discussion held in Singapore, updates on other developments in China, Taiwan, and Indonesia, and more information of interest to enterprise risk management professionals.
This Milliman Asia ERM Newsletter highlights the latest developments in enterprise risk management (ERM) across the Asia Pacific region. ERM activity in the insurance sector is accelerating at a rapid pace around the region, especially since a number of regulators have introduced Own Risk and Solvency Assessments (ORSA). Even in countries where ORSA has not been introduced yet, there is an increased interest among risk managers who realize the value that ERM can add to their business through enhanced business resilience.
The newsletter features regulatory and market developments related to ERM from India, Singapore, and Thailand. An article by Neil Cantle on the complexity of risk within businesses is also included.