Opening Remarks by Ng Nam Sin, Executive Director, Monetary Authority of Singapore,1st Asian Conference on Human Resource and Training Development in Insurance29 June 2006, at Grand Copthorne Waterfront
Good morning ladies and gentleman,
1 I am delighted to be here with you this morning at the "1st Asian Conference on Human Resource and Training Development in Insurance". It is indeed timely to focus our attention on human capital - which is undoubtedly very important in today's new economy. With greater emphasis on competency and professionalism in the insurance industry, I am happy that Asia Insurance Review is organising this first ever regional conference dedicated to HR and training issues.
2 Allow me to first touch on Asia's growth, and what this means in terms of opportunities and challenges facing the industry. I will then recap some of our initiatives to develop Singapore as a leading Asian insurance centre, before moving on to discuss the need to build a world-class talent pool for this industry.
3 Emerging Asia grew at rate of 8.2% in 2005, much faster than the average global growth rate of 4.8% . Closer to Singapore, prospects for Southeast Asian economies are bright. Southeast Asia has a thriving population of 500 million, with a growing middle-class. The region has recovered from the Asian Financial Crisis, and governments around the region are channeling efforts and resources fostering economic growth.
4 Southeast Asia's economies have also repositioned themselves to benefit from China's and India's rapid developments. Instead of entering into direct competition, the economies in Southeast Asia have reinvented themselves - industries have moved up the value chain, and tourism and export industries are benefiting from the growing demand from China and India.
5 The impressive growth of insurance premiums in emerging markets led by Asia; coupled with its relatively low penetration rates, has resulted in substantial opportunities for insurance companies. Leading insurers have therefore made expanding in Asia a key focus. Underlying the strong growth trend are opportunities for specialist lines of businesses to cater to the needs in Asia. Let me briefly highlight some of them:
a) First, the increased flow of Asian trade and infrastructure investments has generated demands for specialised protection and insurance coverage;
b) Second, rising corporate governance standards have led to increased needs for Directors and Officers' Liability, Professional Liability and Product Liability cover;
c) The third observation relates to Asia's growing ranks of middle class and High Net Worth Individuals (HNWIs). With its large populations and rising household income, HNW life insurance is emerging as a highly sought-after asset class in these individuals' asset allocation strategies;
d) Lastly, we also see growing risks from various dimensions such as credit/ operations, and catastrophes in Asia. This calls for better risk modeling and research capabilities that caters to the different financial systems and risks present in various parts of Asia. It follows then that there will be an increasing need for the industry to manage exposure to policy commitments and guarantees, by using derivatives and capital market instruments.
6 So, what does these trends mean for Singapore? Riding on the growth of our regional economies, there is considerable room for Singapore to continually remake itself. We have a strong value proposition, underpinned by sound fundamentals and our web of connectivity to high growth regions in Asia and beyond. A large number of international insurers, reinsurers and intermediaries are already here. We are also the largest domicile for captive insurers in Asia.
7 To reinforce our position as Asia's leading insurance and reinsurance hub, MAS with support from industry, has put in place several initiatives. These include:
a) building a critical mass of specialist insurers and reinsurers, which will in turn, attract new capital into Singapore;
b) strengthening our position as the leading Asia captive domicile; and
c) diversifying our ecosystem to develop insurance infrastructure and ancillary service providers.
8 Having a vibrant and diverse insurance ecosystem is important. But to realise our ambition as a full-fledged insurance hub, what is most critical is the people. The insurance industry is increasingly competing on the basis of product innovation and differentiated service. To stay at the forefront of these developments, talent will be the key enabler.
9 However, there is a shortage of skilled insurance talent, notably in technical and specialist professions such as underwriters, brokers, actuaries and compliance professionals. The talent squeeze is evident not only in Singapore, but other centres in Asia & Europe too.
10 The ability to attract talent with specialist is made more important for a few reasons. (i) Increasing integration between insurance and capital market products, (ii) growing client sophistication and their corresponding demands for comprehensive financial solutions, and also (iii) the need to assess and manage risk given changing global trends in the market. This has resulted in intense competition for insurance talents.
11 Given this, what should be our priorities to develop a deep pool of skilled insurance talent. This will be discussed in depth at this conference, but I would just like to highlight two broad directions:
a) First, we need to build a deep pool of insurance talent;
b) Second, we need to raise the capabilities of insurance practitioners;
12 Allow me to elaborate on each priority.
13 The priority relates to the need to build a deep talent pool. To achieve this, it is vital that we build a strong pipeline and increase the flow of talent into the insurance sector.
14 In the near term, MAS and industry players have made concerted efforts to expand the talent pool, by tapping on diverse sources of markets such as students, working professionals and overseas talent. We have increased our efforts to promote Singapore's financial centre and our proposition as an attractive place to work-live-play.
15 Over the longer term, we need to (i) expand the pool of job-ready students as well as (ii) increase the inflow of talent into the sector. To keep pace with the rapid changes, it is imperative for our students to not only have a firm grounding in the theoretical fundamentals, but also an appreciation of the latest market developments and industry knowledge. To achieve this, we have recently established a Pre-employment Tripartite Taskforce as a key platform for industry, institutions of higher learning and Government to collectively address the manpower and skill needs of the financial sector, with focus on the pre-employment talent pool.. This is a significant step towards bridging the formal education and training in our institutions of higher learning with the demands of the industry.
16 Besides building a deep pool of indigenous insurance talents, it is equally important to attract top minds and good talent from all over the world. Singapore has built a reputation for being a global talent hub, cited by leading authorities such as The Economist's "World in 2005" which declared us as the best place to live in Asia, and the IMD World Competitiveness Yearbook 2005 which ranked us as the most attractive Asian economy to foreign high-skilled professionals This positive standing is due partly to Singapore's attractiveness as a destination to work, live and play, as well as our open-door immigration policy to foreign talent..
17 Infusion of new skills goes beyond the point of entry into the sector. Our second priority therefore focuses on raising the capabilities of insurance professionals already working in the sector. With an increasing overlap and keen competition of services offered by insurers, banks and capital market service providers, the industry needs to keep pace by continually raising the level of professionalism, capabilities and international exposure of their workforce.
18 The Institute of Banking and Finance, with the support of MAS and industry, launched the Financial Industry Competency Standards (FICS) last year to benchmark competency standards of financial professionals, including insurance professionals, to international best practices. Competency standards have been established for key insurance job families - from claims handling to underwriting. To enable greater access to the FICS training and assessment infrastructure, FSDF will co-fund 70% of the training and assessment fees for FICS-accredited programmes incurred by financial institutions for their Singapore-based staff. I strongly encourage industry to make full use of the funding scheme and upgrade the competencies of your staff.
19 In the area of training, there is strong potential for us to be the leading insurance training hub in Asia.. Here, we have a wide network of top training institutes and programmes in the league of Singapore Insurance Institute, Singapore College of Insurance (SCI), Faculty of Insurance (a collaboration between Singapore Insurance Institute and Chartered Insurance Institute. Strong collaborations between government, industry associations and professional bodies committed to raising the level of professionalism and ethical standards is important.
20 To conclude, this is an exciting time for the insurance industry. The insurance landscape will be shaped by many forces, and continue to evolve over time. However, human capital will remain the single most important force behind the growth of the industry. To succeed, it calls for financial institutions to be big on talent, and consistently invest in people's skills and competencies. MAS will continue to work with industry players to enhance the capabilities of our insurance talents, and establish Singapore as the leading insurance hub in Asia.
21 For all of you present this morning, I look forward to your active and continued participation in the insurance industry. Thank you.