Published Date: 24 March 2016

"Sharpening Focus in a Dynamic Landscape" - Address by Mr Chua Kim Leng, Assistant Managing Director, Monetary Authority of Singapore, at GIA Annual General Meeting Luncheon 2016

Mr A.K Cher, President of the General Insurance Association,

Distinguished Guests,

Ladies and Gentlemen,

1 A very good afternoon. It is my pleasure to join all of you again at your Annual General Meeting Luncheon. I would like to first congratulate Mr Cher on your re-election as President of GIA. I would also like to congratulate the other elected Management Committee members, and thank all of you for taking up the challenge to lead the industry over the next two years.

2 GIA ushers in its golden jubilee this year and there is much to celebrate. Over the past 50 years, GIA has made invaluable contributions to the growth and development of Singapore’s general insurance industry. MAS and GIA have enjoyed a very good working relationship over the years, and I’m confident that this partnership will continue for many years to come.

3 I’m pleased to note that the GIA has been working relentlessly on important industry initiatives that not only benefit insurers, but also consumers and other stakeholders. Within the past year alone, GIA has refined the Barometer of Liability Agreement (BOLA) system to expedite the settlement of motor claims, and also overseen the successful commencement of audits on general insurance agents.

4 Sir Winston Churchill once said this, “If I had my way, I would write the word ‘insure’ upon the door of every cottage, and upon the blotting book of every public man, because I am convinced, for sacrifices so small, families and estates can be protected against catastrophes which would otherwise smash them up forever.” That was said during a speech in 1909, yet now, as then, insurance continues to play a pivotal role in society. We depend on insurance for many aspects of our life – for giving us peace of mind while travelling, for providing protection cover for our loved ones, and for ensuring that we are financially safeguarded should we lose our homes or possessions.

5 While the importance of insurance to society is timeless, the challenges and risks faced by the industry, on the other hand, are dynamic and constantly evolving. As Mr Cher mentioned earlier, although the general insurance industry recorded a healthy growth in gross premiums last year, it faces potential headwinds in several areas. It is therefore imperative that the industry is cognisant of key developments that will impact the landscape in which insurers operate in. With this awareness, a solid foundation and focus can then be established to ensure that the industry is well-equipped to face the challenges, and build on future opportunities.

Industry Challenges

6 I would like to draw your attention to four specific areas that are impacting insurers today – namely, technology, fraud, consumers, and competencies.


7 Let me start with the topic of technology. Technology has two faces – it opens up opportunities, but also exposes insurers to new risks.

8 In this era of an increasingly tech-savvy consumer base and widespread digitisation of customer information, insurers should leverage the various facets of technology such as data analytics, mobile apps and social media presence, to strengthen their consumer engagement and improve consumer experience.

9 In its 2016 outlook for the Asia-Pacific insurance market1, Ernst & Young has identified the accelerating shift to online and mobile access as the top strategic priority for Asia-Pacific insurers to find new avenues of growth and profitability. In this regard, insurers that are able to utilise the predictive power of big data to deepen their understanding of consumers’ needs and behaviour, will have a competitive edge in designing, and making available products that better serve their customers. In addition, these insurers are likely to have a compelling strategy in place to transform their consumer interactions, and expand their reach in the digital marketplace. I would therefore like to encourage insurers to embrace technology, not just to streamline processes and improve productivity, but as a strategic tool for driving the business.

10 Just as technology provides new growth opportunities, it also poses new risks. According to a 2015 report by the Centre for the Study of Financial Innovation2, cyber risk was ranked as the number one risk concern among direct general insurers globally.

11 As more and more insurers move into online and mobile distribution channels, their vulnerabilities to cyber-attacks and data theft will continue to mount. With the growing sophistication of cyber criminals, the average time to resolve a cyber-attack has risen to 46 days in 2015, up from 32 days in 2013, according to a study by the Ponemon Institute3. This risk is further compounded by the amount of sensitive policyholder information, such as medical, credit card and other personal records that insurers possess, which if compromised, could lead to a loss of trust by consumers. We know that trust, once lost, takes a long time to rebuild.

12 In view of the growing threat of cyber risk, MAS has, in October last year, issued a guidance to all financial institutions reinforcing the notion that an institution’s board and senior management are responsible for the oversight of its technology risks and cyber security. Besides endorsing the organisation’s IT strategy and risk tolerance level, MAS also expects the board to be up-to-date on important technological and cyber risk developments. I urge insurers to remain vigilant in monitoring and combating cyber threats.

Insurance Fraud

13 The second challenge that I would like to touch on is insurance fraud. In a recent article, KPMG highlighted fraud as one of seven key risk areas that should top the risk management agendas of chief risk officers this year4. Similarly, fraud risk poses a significant challenge for the insurance sector. Should the industry be unable to mitigate this risk effectively, the cost of fraud would eventually be borne by shareholders in the form of lower returns, and for policyholders, higher premiums. This is an undesirable scenario for both insurers and consumers.

14 Closer to home, insurance fraud, particularly motor insurance, is an area that the industry has been paying close attention to. GIA estimated that fraudulent motor claims, which include both inflated and false claims, account for one-fifth of all motor insurance claims in Singapore. This translates to over $140 million a year5.

15 I am heartened to know that GIA is committed to combatting insurance fraud. The Association has established the Fraud Committee and Fraud hotline, and its efforts have achieved some success in recent years. GIA is continually seeking to better understand the behaviour of fraudsters. For example, there is a general tendency for fraudulent claims to be intentionally kept below certain thresholds, in the hope that insurers will be more likely to make payments for such claims to avoid the costs of lengthy investigations. I understand that GIA is planning to develop a system with the capabilities to carry out data and trend analysis to identify potential fraud-related hot spots. While the time, money and effort required to embark on such a project are non-trivial, it will be but a fraction of the potential losses incurred by the industry as a result of fraudulent claims. I encourage the industry to lend your support to GIA for this initiative.

Consumers – Focusing on consumers’ interests

16 Let me now turn to the third area – consumers. There should be a renewed imperative to focus on consumers. The typical consumer today is very different from his predecessor – he is more sophisticated, more mobile in switching product providers and more empowered through digital technology, including social media. He also has higher expectations of his insurer in terms of products and services. A dissatisfied customer will not hesitate to switch to an insurer that can better meet his needs and expectations, and he can do so with ease in today’s world.

17 A recent global insurance consumer survey conducted by Accenture6 found that a rather low proportion of consumers, 29% to be exact, were satisfied with their current insurance providers. In addition, more than one-fifth of the respondents felt that most insurers offered largely similar products and services, with little meaningful differentiation.

18 To compete more effectively in the new landscape, insurers will have to improve their levels of consumer understanding and customer segmentation. This will enhance insurers’ ability to customise appropriate product features for each customer segment, thereby helping to better meet different consumer needs and build consumer loyalty. Insurers will also have to meet higher expectations of good service and claims experience, which are key factors in building loyalty and trust. Insurers that are able to do this well will almost certainly achieve a competitive advantage in growing their business.

19 To support the industry in promoting greater consumer awareness and understanding of insurance products, MAS is reviewing the feasibility of introducing product highlight sheets for selected general insurance products. This will provide consumers with a clearer disclosure of key product features, obligations, and terms and conditions. With such information at hand, consumers will be better equipped to determine if a particular product suits their needs. Ensuring that consumers are well-informed will also lead to fewer claim disputes and complaints. MAS is in the midst of engaging the industry on the proposed requirements, and will conduct a public consultation in due course.

Competencies – Developing competencies and talent

20 With that, I’ve come to the final topic – developing competencies and talent. As the industry continues to explore new opportunities in an increasingly complex environment, and as consumers become more sophisticated and discerning, insurers will need to attract employees with the relevant skills, expertise and values.

21 In a recent survey conducted by StrategicRISK in 20157, Asia-Pacific corporate risk and insurance managers identified the challenge of attracting and retaining a talented workforce as one of the key areas that would have the biggest financial consequences for an insurer. Within the Asian region in particular, the shortage of talent is even more acute.

22 Developing a competent workforce in Singapore will entail the collective efforts of both the industry and the government. I recognise and applaud GIA’s contributions over the past years in building the industry’s talent pool through its Global Internship Programme. At MAS’ end, we have been working in close collaboration with the industry and institutes of higher learning to strengthen the local talent pool. Together with GIA, the Singapore College of Insurance and other industry associations, we jointly developed the Insurance Talent Development Framework in 2014, with the aim of building up the supply of local talents. This includes entry-level programmes such as the Insurance Executive Assistant Programme and Insurance Management Associate Programme for diploma holders and fresh graduates; mid-career programmes like the Insurance Specialist Programme for experienced industry professionals; as well as the Insurance Leadership Programme for senior leaders.

23 MAS has also been working closely with the Nanyang Technological University (NTU) to establish a Risk Management and Insurance major under NTU’s Business Degree. Under this new major, academic courses will cover topics that correspond to modules offered by the Chartered Insurance Institute. This programme will be launched in August this year and is expected to produce 50 new graduates with relevant risk management and insurance knowledge every year starting from 2018.

24 Finally, as part of the national SkillsFuture initiative to foster a culture that supports lifelong learning, we have recently launched the SkillsFuture Financial Sector Study Award for financial sector professionals. This award aims to equip Singaporeans, especially those in the early to mid-stages of their careers, to develop and deepen their competencies through a wide range of specialist programmes and courses. We will work closely with GIA and the industry to identify useful insurance-specific courses that can be supported under this award.

25 I encourage the industry to press on in its efforts to cultivate a competent and sustainable talent pipeline, in order to cater to the growing needs of the industry.


26 To conclude, since its inception, GIA’s key objectives have been to establish a sound and efficient insurance structure in Singapore, foster public confidence in the industry, and promote education and training in all aspects of insurance. GIA has achieved these objectives commendably, even though it has had to face many challenges over the years. As the insurance industry continues to evolve, MAS will continue to partner closely with GIA to promote the sound and sustainable growth of the sector.

27 Let me extend my heartiest congratulations to GIA on your golden jubilee, and wish you many more fruitful years ahead. Thank you.


[1] “2016 EY Asia-Pacific Insurance Outlook”, Ernst & Young LLP, January 2016 
[2] “Insurance Banana Skins 2015”, Centre for the Study of Financial Innovation
[3] “2015 Cost of Cyber Crime Study”, Ponemon Institute

[4] “KPMG spotlights key risk management issues for 2016”, KPMG LLP, January 2016 
[5] http://www.straitstimes.com/singapore/courts-crime/man-helped-stage-crashes-in-11m-motor-insurance-scam, The Straits Times, Dec 2015 
[6] “Accenture Strategy Report – Capturing the insurance customer of tomorrow”, Accenture, 2015

[7] StrategicRISK’s Asia Risk Report 2015