Thursday, December 14, 2017

Investment return gap among Asia Pacific insurers widens

Insurance firms in the Asia-Pacific region are faced with a widening gap between investment returns and meeting customer promises, according to a survey by Standard Life Investments.

According to the study, cash, bank deposits, and fixed income securities account for almost 71% of total investments.

On the other hand, guaranteed products bought by policyholders make up for 51% of the asset mix of the insurers surveyed.

The survey specifically asked 51 senior insurance investment executives in six Asia Pacific markets, representing a US$4 trillion or 60% of the total insurance assets in the region.

The return gap was particularly a pressing concern in Japan, South Korea, and Taiwan.

In these countries, insurers have inadequate investment returns to cover promises made to end-users.

Standard Life Investments urged insurers to quickly tackle these return gaps and transition to more risk-based, outcome-oriented investment approaches.

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