Distinguished guests
Ladies and gentlemen

1     Good morning and a very warm welcome to everyone, especially to our guests from overseas.  It is my pleasure to be here today.  The organisers, Asia Insurance Review and The Geneva Association, have chosen an apt and interesting theme for this year’s Summit - “Disruptions, Innovation and New Horizons – Reinventing the Business”, which I am sure, will generate open and insightful discussions over the course of the conference.

2     The environment in which insurers operate has been undergoing a myriad of changes.  To name a few:

• Market competition has intensified, especially in reinsurance markets hit by excess capacity and the entrance of alternative capital.
• Regulation and capital standards have or are being tightened in many jurisdictions.
• The risk landscape is changing with more severe natural catastrophes, ageing and declining populations as well as a less optimistic economic outlook and more uncertain investment climate in some parts of the world.
• And technology has not only altered customer preferences and buying behaviours, but also led to newfound scrutiny in the areas of cyber risk, data security and privacy.

3     For many market participants and observers of the industry, many of these changes are not merely cyclical, but changes with a permanent and structural impact on the industry.  It is therefore imperative that the leaders of insurance companies handle today’s disruptions and challenges well, so that the companies that you lead will be well-placed to compete in the new horizon.

4     I would like to briefly put forward three areas that leaders of insurance companies can build, in order to thrive in a changing landscape and manage evolving expectations.

• First, a strong risk governance culture to manage the changing risk landscape. 
• Second, a reputation of excellent service to win and keep customers.
• And third, a competent workforce to drive the company ahead of its competition.

Building a strong risk governance culture

5     I will start with building a strong risk governance culture.

6     The changing risk landscape can open up new opportunities for insurers to provide and extend coverage.  From the perspective of a regulator, the aim is not to curtail risk-taking activities per se, but to ensure that financial institutions manage risks effectively, and that we guard against a build-up of systemic risks.  The regulatory landscape, in Asia and in the rest of the world, is evolving to ensure regulations keep pace with the changes.  Jurisdictions in Asia have been enhancing or moving towards risk-based solvency regimes. Some have also strengthened corporate governance rules, and put in place regulations for enterprise risk management.  And we should expect further adjustments to regulatory frameworks as insurance markets in the region mature.

7     While regulation can foster confidence in the industry through promoting sound risk management and governance, it alone cannot achieve the desired outcomes.  A strong culture of risk governance within insurers, that is vigilant in its risk surveillance and management, is a better assurance.  Building a strong risk governance culture starts from the top, where many of you are today.  I encourage leaders to first recognise the benefits of strong risk controls and sound risk management, especially in a region that is still largely developing.  This includes ensuring pricing, underwriting and reserving discipline, and addressing other business risks such as credit, market and operational risks.  The presence of strong controls not only strengthens and stabilises domestic markets, customers are also more likely to trust businesses that operate in these markets.

8     At the same time, some insurers may find changes in regulation challenging and have ranked regulatory change among their top challenges in recent years¹.  In today’s climate, insurers must adapt quickly or risk trailing their competitors.  Leaders in the industry should also develop a good understanding of the principles driving regulatory change, and ensure that the same fundamental principles run through their organisations.  In some cases, it could be to enhance the strength and stability of insurers; in others, to develop domestic markets or to protect consumers.

9     At the MAS, we will continue to work with the industry to promote sound risk management.  There will be a panel discussion tomorrow and I look forward to that further discussion on a broader issue of the industry’s partnership with regulators.

Building a reputation of excellent service

10     Second, building a reputation of excellent service.

11     In 2013, a Verint-commissioned consumer insights study revealed that only 23% of consumers in Asia Pacific valued price over service, and 45% were willing to pay more for better service. This was supported by American Express’ 2014 Global Customer Service Barometer, which found that over 60% of consumers in Hong Kong, and more than 70% in Singapore and India, had spent more with a company because of a history of good customer service experiences.  The results of these surveys underscored the importance of good service and debunked the notion that consumers, especially those in developing countries, valued price above all.  Providing good service in Asia will become more important as markets develop, affluence rises and consumers become more demanding.  Insurers operating in Asia should therefore make superior service a priority and goal by providing value and products that meet customers’ needs. 

12     Good service should be provided at every stage of the business relationship – from the provision of appropriate sales advice and fair dealing, to the convenience of distribution channels, efficient claims processing and even the protection of customer information.  With technology re-defining information flows and altering customer preferences and buying behaviours, avoiding technology and innovation is not an option. Insurers must innovate with the help of technology, and continually look for ways to improve customer experience.

13     Technology itself also presents challenges – recent cyber threats and data loss incidents serve as strong reminders to stay vigilant.  Excellent service also entails ensuring customer data are secure and protected from cyber-attacks.  And this is also related to my earlier point on having a strong culture of risk governance which must extend to protecting customer data.

14     A good reputation takes years to build, seconds to damage, and much longer to repair.  Leaders in the insurance industry must therefore guard the reputation of their companies strongly.  We must also remember the important role that insurance plays in society – one of protection and economic stability – and to try to serve the community in the best possible way.

Building a competent workforce

15     And lastly, building a competent workforce.

16     With the rapid expansion of global insurance groups in Asia, competition has intensified not just for insurance business, but also the limited talent in the region.  Asian insurance markets have yet to mature; this means that there will be growth opportunities.  Talent development should therefore be an important component of your plans for Asia.

17     Building a competent workforce requires the combined efforts of government and industry, and MAS has been working closely with the industry on various manpower development programmes.  The Insurance Executive Assistant Programme, the Insurance Management Associate Programme for entry-level professionals, as well as the Insurance Specialist Programme and the Insurance Leadership Programme for experienced industry professionals are part of these efforts.  We will continue to work in partnership with the industry to expand the depth and breadth of training programmes.

18     Apart from raising the competencies and productivity of their employees, insurers could also look at raising the profile of the industry, bringing in talent from other industries and instituting effective talent retention measures.  The ability to attract, develop and retain talent with the right skills and expertise, and values, will be critical to succeed in this increasingly competitive and complex environment.  We encourage you to invest in the continuous development of your people.

Conclusion

19     In conclusion, as insurers maneuver through the changes – be they disruptions, innovations or new horizons, it remains important for leaders to give attention to building a strong risk governance culture, a reputation of excellent service, and a competent workforce.  Doing these areas well will position insurers to contribute and share in the growth of this region and also foster a trusted and sustainable insurance industry. 

20     On this note, I wish you a successful and fruitful conference.

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¹ PricewaterhouseCooper’s 17th Annual Global CEO Survey
Towers Watson's 2015 Insurance Industry Outlook Survey