CEO on mounting regulatory challenges for APAC insurers

Guy Carpenter’s Tony Gallagher said adopting a multi-faceted approach is key to navigating the ever-evolving IFRS 17 requirements.

Sifting through the line-up of risks the Asia Pacific (APAC) region is going through this year, regulatory and compliance challenges are top of mind as far as industry players are concerned.

According to the sixth edition of Global Insurance Law Connect’s annual Risk Radar Report, other significant challenges still include natural disasters due to climate change, cyber security threats, artificial intelligence, and consumer protection regulations.

The report, which drew insights from law firms across 27 countries, outlines key changes and outlooks in global insurance markets.

Australia’ insurance industry, for instance, is experiencing growth that is expected to continue for at least three more years. Its key issues include resilience to natural disasters, data protection, cybersecurity, the impact of AI, and regulatory compliance.

China’s insurance market, likewise, is on a growth trajectory with a positive outlook on risk mitigation strategies. New regulations and digital technologies are transforming the market, though challenges like regulatory compliance, cybersecurity risks, and competition persist.

Significantly, India’s insurance market, currently the 10^th largest globally, is projected to become the sixth largest by 2032. This growth is driven by economic expansion, rising disposable incomes, a young population, increased risk awareness, digital penetration, and regulatory developments.

New Zealand, for its part, is implementing mandatory climate-related disclosures for large financial institutions to increase resilience against climate change risks. The country recently faced the highest volume of weather-related insurance claims in its history, highlighting the impact of climate change on the industry.

As the landscape shifts, leaders like Guy Carpenter’s chief executive officer (CEO) for APAC, Tony Gallagher, shared how the company guides clients through evolving risks and opportunities.

The CEO told Insurance Asia how adopting a multifaceted approach may alleviate the pains of regulatory changes. Read excerpts from his interview with the magazine.

As a seasoned industry leader, how has your leadership style evolved; and what core principles guide your decisions?

Our industry is experiencing change unlike any before and as our clients face new and evolving threats and opportunities, the ability to see ahead has never been more important. To help our clients navigate, it is important to be agile and to embrace new technologies, and innovative risk transfer solutions and to be prepared to maximise opportunities that emerge as a result of disruption. 

Collaboration is also a core principle that guides my decisions. I value the talents and expertise of different teams across the organisation, as I believe that working together fosters innovation and drives better outcomes.  We regularly bring the best talent, solutions and approaches together from across the globe to help our clients achieve profitable growth, no matter where they are in the world.

Given the complexities of the insurance sector in Asia Pacific, what are the key trends and challenges you see shaping the industry over the next 5 years?

The insurance sector in the region is facing a complex and rapidly evolving landscape, with several key trends and challenges set to shape the industry in the next five years.

Systemic risks including geopolitical volatility and macroeconomic uncertainty, will significantly impact the industry. Increased competition, both in insurance and reinsurance, underscores the importance of effective risk selection and risk management.

Additionally, the rising cost of technology and compliance pose challenges, particularly for smaller and mid-size market players who may struggle to compete with larger firms that have greater scale and resources. Finally, climate change is increasingly influencing the frequency and severity of natural catastrophes [and] perils. Insured losses show an upward trend, driven by more frequent non-peak events influenced by a changing climate.

Navigating this dynamic environment will require insurers to optimise capital, manage volatility and protect earnings in the face of these emerging risks.

We also expect to see technology-driven influences become more prominent as we move through the next few years.  Some of these changes will likely materialise in ways we don’t yet recognise.  Key themes include more efficient and accurate digital trading and continuously deepening insights as we achieve more interconnected access to data.

With varying regulatory environments across the Asia Pacific, how does Guy Carpenter navigate these complexities whilst maintaining its competitive edge?

Guy Carpenter’s Asia Pacific Capital Advisory team is committed to closely monitoring the ever-evolving IFRS 17 (International Financial Reporting Standard) and capital requirements. Our primary objective is to provide strategic guidance to our clients in this regard.

We are also the only market player with a dedicated team of contract wording specialists in the region. They offer on-the-ground support and have expertise in interpreting contract languages, conducting quality assurance reviews, and providing technical guidance.  They provide local expertise while also being able to leverage our global infrastructure across the breadth of our client base.

By adopting this multifaceted approach, we empower our clients to not only fulfil their regulatory obligations but also position themselves for long-term success in navigating the intricate and ever-changing regulatory landscape of the Asia Pacific region.

Looking 5 to 10 years ahead, what are your main objectives for Asia Pacific and how do you see the role of Guy Carpenter evolving in this region?

In the next five to ten years, our primary focus in the Asia Pacific region will be to further solidify our position as a market leader. We will continue to assist our clients in attaining their capital, growth, and volatility goals by providing tailored risk solutions. Given the evolving market and regulatory landscape in the region, discussions surrounding capital management and risk management will become even more vital.

Speaking of APAC, what personal mission or vision drives you in your role as CEO of Guy Carpenter?

As the leader of a highly talented team, my personal mission and vision go beyond business objectives. On an organisational level, I am dedicated to empowering colleagues to unlock their true potential and become the best versions of themselves.

At the client level, I strive to be the trusted partner that clients can rely on, not purely for our technical expertise, but also for our understanding of their unique needs and challenges. Together, we can make a meaningful difference in the lives of our clients, our colleagues and the communities we serve.