Protection gap in Southeast Asia a massive opportunity for insurers: S&P
Insurers can help insure the bottom 40% income group or address vulnerabilities to natural disasters.
Opportunities are abundant in South and Southeast Asia for insurers looking to enter or expand into these markets, according to S&P Global Ratings.
The large protection gap in emerging markets within these two regions is indicative of a massive growth opportunity for insurers to address, the ratings agency noted.
Malaysia, for example, recently launched the mySalam scheme, which saw the government and the insurance sector collaborate to offer simple insurance products to the bottom 40% of the country’s income group.
In the Philippines, there is much opportunity for insurers to tackle the nation’s increasing vulnerability to natural disasters, S&P said.
Growth in premiums across both the life and P&C sectors in the region are likely to be resilient over the next two years.
“In emerging South and Southeast Asia, both sectors avoided the full brunt of the economic slowdown but remained affected during the pandemic. Increasing risk awareness, improving financial literacy, and evolving regulations underpin the prospects for growth in the region. This is despite macroeconomic uncertainties,” S&P said in a report.
ALSO READ: Health planning amongst top financial goals of 3 in 10 Hongkongers
S&P further believes insurers that can adapt their products, pricing, and distribution strategies in the face of emerging risks and developing trends are more likely to remain relevant and ensure sustainable profitability.
Stages of life
The changing demographics across these markets are also a win for life insurers. S&P observed a growing demand for higher coverage and insurance that corresponds to changing financial responsibilities across life stages: from education to the retirement phase.
The pandemic, meanwhile, underscored the importance of health insurance and financial planning.
“At the same time, a higher ratio of working-age adults will likely equate to greater demand for savings and protection insurance. This trend is occurring in India, Indonesia, and the Philippines,” S&P noted.
One notable exception to this trend is Thailand. It’s ageing population is encouraging insurers to explore retirement and annuity products, the ratings agency observed.