Opening Address by Mr Low Kwok Mun, Executive Director, Monetary Authority of Singapore, at the 2nd Asia-Pacific Insurance Education & Training Conference
1 Good morning ladies and gentlemen.
2 Let me first warmly welcome all our foreign guests to Singapore. I would also like to thank the organisers for bringing this conference to Singapore following the success of the inaugural conference in Shanghai last year. It is indeed my pleasure to join you this morning and share with you my perspectives on the important issue of insurance education and training.
Growth of Asian Insurance
3 We are well aware of the emergence of Asia as a powerhouse of the global economy. Driven by the two economic giants, China and India, Asia’s economy has been growing strongly. I am sure many of you are already enjoying the fruits of the current wave of economic success in Asia. However, your presence here at this conference indicates the significant importance of continuing to develop human capital in order to sustain growth. In Singapore, given our small population, ensuring that we have highly productive and effective human resources is a key element for our continued economic progress. But this is a significant challenge given the competing demands for talent in this region.
4 The strong economic growth has led to an unprecedented level of wealth creation in Asia. This has in turn changed the perception of the insurance markets in Asia from one that is described as ‘opportunistic’ to a ‘core’ market within the space of a few years. According to estimates from Swiss Re, insurance premiums (both life and non-life) have been growing faster than GDP in most emerging Asian economies and this trend is expected to continue over the medium term.
5 This impressive growth offers significant opportunities to both indigenous and international insurers. In particular, there is keen interest to grow the specialised insurance lines amongst the leading players to meet the increasing demand for such products in the region.
6 Intra-Asian trade and infrastructure investments have ballooned to more than 50% of the region’s total trade in 2005. This has in turn generated increasing demand for specialised insurance coverage for marine cargo, trade credit, property and political risks. With Asian corporates seeking to expand into the regional markets, they will need appropriate products to insure against the more complex risks that they will be exposed to across different markets, products and business lines
7 At the same time, the rising affluence of Asia’s large and growing population means a greater need for professional wealth management services for the larger pool of wealthy individuals. It has been estimated that more than half of the Asian wealth is currently not managed by professional wealth managers. Specialised life insurance products for the high net worth will be an important asset class to meet the investment needs of such wealthy individuals.
8 Besides these economic developments, climate and demographic changes will also spur the demand for more sophisticated insurance products in Asia. Asia is not spared the risks of natural catastrophes and the challenges of increasing longevity. All of these mean that there will be increasing demand for more and better skilled insurance professionals to develop and structure appropriate products to meet the needs of Asian corporates and individuals.
Insurance Talent and Expertise
9 In Singapore, we recognise that we need to attract and train new talent to add to the talent pool as well as upgrade existing talent to ensure that they remain relevant. But the demand for skills and talent is not confined to just the insurance sector. Across the region, the banking and capital markets have continued to grow, and in some cases even faster than the insurance sector. The continued blurring of lines between banking, insurance and capital market products means that individuals with insurance skills will also be sought after by banks and capital market service providers.
10 As a result, the challenge for the insurance sector to continue to attract top talent is made much more difficult. I don’t think many of you will be surprised if I say that the insurance sector is probably not on the top of the priority lists of graduates entering the workforce. Most have the mistaken impression that joining the insurance sector means becoming an insurance agent, pushing simple life insurance products to the masses. There is less appreciation of the much more challenging and rewarding careers in the more specialised fields such as underwriting, actuarial analysis and risk modelling. This is not peculiar to Singapore, but many countries in the region as well. In fact, the inability to attract new talent was cited as one of the top three risks facing the global insurance industry in the 2007 Insurance Banana Skins survey conducted by UK ’s Centre for the Study of Financial Innovation.
Growing the Insurance Talent Pool
11 It is, therefore, important that all of us work together to raise the profile of the insurance industry and enhance its image. To this end, I am pleased to note that the insurance industry associations in Singapore, with the support of the Institute of Banking and Finance and the MAS, have come together to promote insurance as an ‘industry of choice’ through campus outreach events at the local universities and polytechnics. This is a key component of the General Insurance Association (GIA)’s Talent Outreach Project that was launched earlier this year to attract new blood into the industry and to groom the next generation of insurance leaders.
12 I am also pleased to note that the GIA has taken the lead to establish the Regional Development Committee (RDC), which brings together all industry players within the general insurance fraternity to develop Singapore as a regional insurance hub. The RDC is currently working on a prestigious “Internship Program in Risk Management and Insurance” to attract top undergraduates into the industry. This will involve invaluable overseas attachments in global hubs like London and New York. At the same time a “Marine Insurance Internship Program” is being considered to develop expertise in marine insurance as one of the specialist career streams. These initiatives are most commendable and deserve full support from all in the industry.
Developing Insurance Expertise
13 Attracting talent to join the insurance industry is only one part of the solution. We also need to ensure that the skills of existing insurance talent continue to be enhanced in line with the growing sophistication of the industry. To raise the level of skills and competencies of Singapore ’s financial sector workforce, the financial industry implemented the Financial Industry Competency Standards (FICS) framework in 2005 to benchmark competency standards of financial professionals to international best practices. The industry should leverage on the FICS infrastructure which has been established for key insurance job families, ranging from underwriting to claims management in both life and general insurance. The Singapore College of Insurance (SCI) is playing a key role in this national initiative, having recently been appointed as the lead provider for FICS accredited training and assessment programs for general insurance, life insurance, and the retail and mass affluent segments in wealth management. I note that the SCI will be sharing more about their role later in the day.
14 Besides building a broad base of insurance talent, it is also necessary to develop industry specialists and leaders. In this regard, the industry is partnering with the academia to introduce targeted scholarship programs in fields such as risk management, quantitative finance, actuarial science and economics. In addition, together with the SCI, the Singapore Insurance Institute and the UK-based Chartered Insurance Institute, provide a good mix of quality professional training programs that lead to the award of well regarded certifications and qualifications. We believe that a strong collaboration between the government, industry associations and professional bodies committed to raising the level of professionalism in the industry would be needed to ensure that the insurance industry continues to attract good quality talent.
15 Singapore’s small population means that there will be limited talent if we rely only on our indigenous talent pool. As such, we have long recognised the need to make Singapore a choice location for well qualified foreign talent to work, live, learn and play. The attractiveness of Singapore has been endorsed by the Economist, the International Institute for Management Development (IMD) and Mercer Human Resource Consulting, which acknowledged Singapore as the best place to live in Asia, and one of the most attractive Asian cities for highly-skilled foreign professionals.
16 It is important for us to make sure we remain attractive to top minds and good talent from all over the world, as they do not just add to the number of professionals, but also bring with them rich perspectives, experiences and ideas. Over the past two years, MAS has partnered with the industry and other government agencies on various overseas outreach events to the US, UK and Australia to promote greater awareness of Singapore as an international financial centre that offers attractive working opportunities. To supplement such efforts, the Institute of Banking and Finance launched the FinanceConnectSingapore web portal in September 2006, providing a one-stop information portal showcasing Singapore’s financial centre, with information on its financial institutions, activities, and career and training opportunities.
17 In conclusion, the insurance industry in Asia is entering into an exciting phase of growth and expansion, buoyed by Asia ’s strong economic growth prospects. To ensure that the industry is able to capitalise on this tremendous potential, we need to invest wisely to develop our human capital. This is not a short-term task, but requires persistence and patience. Most importantly, we need to position the insurance industry as one that offers a challenging and rewarding career in order to attract top talent. I have briefly shared with you some of the initiatives that we are working on in Singapore. I believe you will hear more of them during the conference and I hope this conference will help to generate more good ideas that we can all work on together. I wish you a successful conference.