Insurance 2021 - the year ahead
Asia Pacific will see re/insurance M&A bounce back in 2021
Insurance 2022 - the year ahead
Increased regulatory scrutiny, heightened market volatility and the continuing low interest-rate environment will continue to heap pressure on life insurers across APAC in 2022.
Smaller to medium sized local insurers are likely to face the most challenges and we foresee some divestments of assets as a consequence – predominantly from multinational groups or regional life insurers siphoning off less profitable books or divesting assets in jurisdictions where they lack scale.
Strategic partnerships with social media and lifestyle platforms, loyalty programmes and online retailers will continue to be popular in Asia as a means for life carriers to access new distribution networks and introduce new product branding. The emphasis is typically on simpler, short-term products, such as medical coverage with life insurance elements.
High net worth (HNW) type products will continue to be a thriving market in Asia, as HNW individuals increase in number, and volatility in the investment markets leads them to seek more stable returns through life insurance products.
In Australia, meanwhile, the 2017 Banking Royal Commission continues to impact the life market, with increased scrutiny of carriers by Australian regulator ASIC, which has stepped up prosecutions for breaches of The Corporations Act, levying a number of substantial fines against life insurers.
There has also been an increase in class actions against life insurers, largely stemming from bancassurance sales of ancillary “junk insurance” products – a trend which we anticipate will continue into 2022.
Assessment of life insurance claims has become a financial service under Australian law, subject to the Corporations Act, driving life insurers to examine their claims processes and put safeguards in place where necessary – all of which is hitting bottom lines.
Carriers in Australia also need to be mindful of breaches of the Disability Discrimination Act, with life insurers who deny consumers cover on the basis of pre-existing mental health conditions potentially facing discrimination claims.
Finally, the impact of COVID-19 on Australian regional economies may drive an increase in claims against life policies, as out-of-work insureds seek redress for unemployment via other means, such as disability or income protection claims.