Milliman: Participating business in Asia
April 21 2015
Participating (par) business represents a significant proportion of the new business being sold in Asian markets, but the current economic environment of low interest rates is testing the viability of existing product offerings. As well as the concerns over continued low interest rates, other potential threats to par business include tightening of prudential regulation (including the influence of Solvency II) and strengthened governance requirements and the risk of mis-selling.
The results of a 2013 Milliman survey of life insurance executives in the region highlighted that demand for par products from distributors and customers is still strong, but the companies themselves perceive the profitability of these products to be low.
Against this backdrop, we have carried out a review of par business in selected Asian markets (China, Hong Kong, India, and Singapore) to gain a better understanding of the issues facing providers in these markets. Where available, we make use of data from the public domain to identify the current trends that are defining the par business markets.
We have also provided a historical review of how par business (also called ‘with-profits’ business in the UK) evolved in the UK, with the purpose of highlighting some of the lessons that can be learned from this older market. We consider how par products there have changed over time, and whether similar product innovation might be appropriate in Asian markets too.
In particular we consider the concept of unitised with-profits (UWP), which, so far, has had limited use in Asia. We look at whether it can address some of the current issues identified with traditional par business, and how it compares to other product types from both the policyholder and shareholder perspectives. We base this analysis on a prototype pricing model, using Singapore as the example market and regulatory framework on which to base it in.
-Milliman
-
QBE’s Hammond on transformation and growth
- July 2
The Asia chief executive discusses Covid-19, going digital and restructuring.
-
Swiss Re: Nat cats and man-made disasters in 2018
- April 10
Climate change, increased urbanisation and a growing concentration of assets were on the risk agenda for 2018.
-
Willis Towers Watson: 2019 Asia Market Report
- March 19
Economic uncertainty, more complex risks and tighter underwriting are all influencing Asia's markets.
-
Peak Re: Emerging Asia’s life and health opportunity
- March 11
Life and health premium growth is expected to outpace GDP gains in eight Asian markets.
-
Peak Re | From climate modelling to market opportunity: forging a new clarity on Southeast Asia’s climate risk
With the insurance industry facing an inflection point, the new imperative is seen as becoming active creators of risk intelligence.
-
BHSI WICare+ | Accelerating Payments, Empowering Recovery
Launched in cooperation with Steadfast’s Singapore network, WICare+ fills the gaps found in traditional coverage and keeps businesses and their workforce secure by covering up to SG$350,000 in medical expenses per claim.
-
BHSI | Managing non-Asian exposure in long-tail lines
While US-exposed business can look attractive to Asian carriers, managing the volatility around the long-term results and the ability to model those losses are crucial, say BHSI’s Marc Breuil and Marcus Portbury.
-
Allianz General | Allianz General combines innovative protection solutions while powering social good to lead Malaysian market
The insurer proactively addresses emerging risks and evolving customer protection needs while giving back to the community.
