Insurance

The Asian insurance industry is an area of the economy that has seen much growth in recent years. The insurance sector was hit hard by the Asian financial crisis of 1997-98, however in 2005 it seems set to
regain its financial strength. Continued economic growth and stability as well as increased investment returns throughout Asia will result in increased demand for personal and business insurance coverage. Recent 2005 estimates predict growth of 5.9% in non-life and 8.4% in life premiums in Asia (excluding
Japan ).

Global insurance premiums totaled $107bn in 2003 of which Asia accounted for only $9.5bn (including
Japan). Asia has no unified insurance regulatory entity and Asian countries have progressed and developed at different speeds. Thus, the regulatory climate for the Asian insurance industry will differ on a country by country basis, however general trends of regulatory liberalization and market deregulation have been
seen. Regional awareness of risk management has also been a theme in recent years.

In 2004 insurers saw improved underwriting results which allowed for a stronger financial positions. Despite improved results the insurance sector also saw increased natural catastrophes resulting in a 2-3% loss of global product and casualty insurance capacity ($25bn). These events and an increase in regional wealth
are expected to fuel higher premiums and profits in 2005. Over the next two years insurance premiums are expected to grow by about 6% Asia .

China which is expected to grow by 9.3% (This figure has been adjusted to account for on-going macroeconomic tightening in China and stabilization of car insurance prices) in 2005 will be a driving force behind growth in the Asian insurance sector. Life insurance premiums in China are expected to grow by
13% in China during 2005. In addition to high growth rates of insurance premiums in Asia , a clear
coverage gap has also been identified. China and Hong Kong alone account for a $4790bn coverage gap.

The Asian insurance sector presents much opportunity, but it is not without risks. The recent SARs epidemic and the terrorist attacks in Bali and throughout the area highlight just some of the concerns for players contemplating entering the Asian risk management markets.

The Asian insurance sector has a bright future ahead, however institutions will be unsuccessful in tapping market potential without a prudent and well-informed strategy.