1、Making the Most of Asia-Pacifi cs Insurance Boom The region offers huge opportunities for insurers,but the rules of engagement are rapidly changing.This report was authored by Henrik Naujoks,Harshveer Singh,Mark Judah,Peter Stumbles and Pency Tam.Henrik,Harshveer,Mark and Peter are partners with Bai
2、n&Companys Financial Services practice and are based in Hong Kong,Singapore,Melbourne and Sydney,respec-tively.Pency is the practice manager with Bains Financial Services practice in Asia-Pacifi c;she is based in Sydney.Net Promoter Score,Net Promoter System,Net Promoter and NPS are registered trade
3、marks of Bain&Company,Inc.,Fred Reichheld and Satmetrix Systems,Inc.Copyright 2019 Bain&Company,Inc.All rights reserved.Making the Most of Asia-Pacifi cs Insurance BoomiContentsAt a glance.pg.2Executive summary.pg.21.The middle class is growing,and regulations are changing.pg.132.Distribution is bec
4、oming more digital.pg.173.Ecosystems are taking hold.pg.214.M&A opportunities abound in evolving markets .pg.25Making the Most of Asia-Pacifi cs Insurance Boom2At a glance A rapidly expanding middle class in Asia-Pacifi cs developing markets is triggering explosive demand for insurance.Deregulation
5、in China,India and other markets has lifted barriers to foreign ownership,creating new openings for multinational insurers.In this sprawling,diverse region,insurers that prosper will develop a repeatable formula for success,venturing only into markets that align with their core strengths.Winners wil
6、l understand the increasing importance of digital distribution,ecosystems and the customer experience.Executive summaryA region rich with promiseOpportunities abound for insurers doing business in Asia-Pacifi c.In China,India and parts of Southeast Asia,households are accumulating wealth,and the mid
7、dle class is expanding rapidly.Total household wealth in the region is on pace to outstrip North Americas by 2023,according to projec-tions by Credit Suisse.In the same time frame,the number of middle-class households will reach 109 million in mainland China and 83 million in India,according to Euro
8、monitor.As people become wealthier,they spend moreboth on necessities,such as food and shelter,and on discretionary items,such as motorcycles and cars.As households accumulate more possessions,they tend to buy more insurance,particularly for homes and vehicles.In mainland China,for example,premium i
9、ncome from general insurance rose at an average annual rate of 13%from 2013 to 2017,and could double between 2020 and 2029,according to a forecast by Swiss Re.As living standards improve,so does access to medical care,spurring demand for health insurance.In many parts of Asia-Pacifi c,people are liv
10、ing longer and the population is aging,fueling the need for life insurance and related products that can help protect family living standards for the next generation.In the Chinese life insurance market,income from gross written premiums grew by about 25%annually from 2013 to 2017.While these sociod
11、emographic shifts are driving up insurance needs,coverage remains low.Consumers in Asia-Pacifi cs developing markets are signifi cantly underinsured.When it comes to life insurance,coverage often falls far short of the amount needed to replace household income in the event of the Making the Most of
12、Asia-Pacifi cs Insurance Boom3policyholders death.Collectively,11 of the largest economies in Asia-Pacifi c were underprotected by around$58 trillion as of 2014,according to Swiss Re.Asians also arent saving enough for retirement,which means there is likely pent-up demand for the savings products so
13、ld by life insurers.Asia-Pacifi c households have set aside slightly more than half of the savings they will need for retirement,according to calculations by HSBC.One measure of insurance penetration,gross written premiums as a percentage of per-capita GDP,signals a signifi cant amount of unmet dema
14、nd in Asia-Pacifi cs developing markets.Penetration is less than 5%in India,Indonesia,mainland China and Malaysia,far below the rates in Hong Kong,Singapore and South Korea.Data from other developing markets shows that insurance purchases can increase dramatically as per-capita GDP rises.Along with
15、these promising demographic and macroeconomic trends,multinational insurers eager to expand in Asia-Pacifi c can also benefi t from deregulationparticularly the easing of restrictions on foreign ownership of local insurers in mainland China,India and other markets.Navigating a diverse set of markets
16、The Asia-Pacifi c insurance market is not monolithic.Each country has unique characteristics,and there is no one-size-fi ts-all strategy for insurers operating across the region.Broadly speaking,Asia-Pacifi c life insurance and general insurance markets fall into four categories:booming giants(mainl
17、and China and India),dynamic developing markets(notably in Southeast Asia),mature markets(including Japan,South Korea and Australia),and hybrid markets(Hong Kong and Singapore).Even within each grouping,differences abound,meaning,for example,a strategy that works well in Indonesia wont necessarily b
18、e effective in Malaysia(see Figures 1 and 2).In the rapidly growing Chinese market,large insurers such as Ping An,China Life,China Pacifi c and the Peoples Insurance Company of China(PICC)hold commanding positions,which presents challenges for overseas insurers trying to make inroads.These domestic
19、giants have focused on pur-suing rapid top-line growth to gain market share,often at the expense of profi t margins in the near term.The three major players in general insurance(PICC,Ping An and China Pacifi c)collectively have a 65%market share in automotive insurance,which accounts for 70%of all g
20、eneral insurance policies written in mainland China,mainly for individual customers.In life insurance,local players hold more than 90%of the market.Large domestic insurers such as China Life,Ping An and China Pacifi c are losing share to midsize domestic players.In April 2018,China announced the gra
21、dual lifting of restrictions on foreign insurers,allowing companies that are 100%foreign-owned to operate in the country.Within seven months,Allianz received permission to set up a wholly owned insurance holding company in Shanghai.Soon after,AXA agreed to acquire the remaining 50%stake it did not a
22、lready own in AXA Tianping Property&Casualty Insurance.India is another large,rapidly growing market dominated by a handful of big companies.From 2013 to 2017,gross written premiums for general insurance grew at an annual rate of 15%,and direct written Making the Most of Asia-Pacifi cs Insurance Boo
23、m4Figure 1:Asia-Pacifi c life insurance markets are at different stages of evolution in terms of economic growth,technology and regulationSource:GlobalDataAustralia9%Hong KongIndiaIndonesiaJapanMainland ChinaMalaysiaSingaporeSouth Korea$53B$70B(direct written premiums)$13B$287B(net written premiums)
24、$400B$10B$23B$101B$11B15%13%11%1%25%7%13%10%Foreign insurers dominate market;75%of Australian life insurance to be foreign-owned after recent acquisitions Low penetration compared with rest of region due to consumer reliance on superannuation as safety net Concentrated market;top 5 insurers account
25、for about 65%of GWP Growth driven by high demand for universal life insurance products,given largest proportion of high-net-worth individuals in Asia A single large player,LIC,accounts for about 70%of DWP Growth driven by expanding economy,deregulation and increased foreign direct investment Fragmen
26、ted market;top 5 insurers account for 49%of GWP Low penetration due to lack of consumer awareness Domestic players dominate market;top 5 domestic insurers account for 50%of NWP Minimal growth expected due to declining premiums in a low-interest-rate environment Relatively fragmented market;top 5 ins
27、urers account for about 50%of GWP High growth expected given expanding middle class and incomes Concentrated market;top 5 insurers account for 80%of GWP,dominated by foreign players Direct digital channels growing fastest;insurers required to increase direct channels share to 30%of total premiums Gr
28、eat Eastern Life leads market(28%of GWP),followed by 4 foreign players Growth expected to continue,driven by demand for investment-linked products Concentrated market dominated by domestic players;top 5 domestic insurers account for 60%of GWP Soft growth expected given government plans for discounte
29、d premium rates for healthy citizensLife insurancemarketGross written premiums(unless otherwise specified),2017Annualgrowth,201317Highlights and outlookMaking the Most of Asia-Pacifi cs Insurance Boom5Figure 2:General insurance markets in Asia-Pacifi c also vary widely in economic growth,technology
30、and regulationSource:GlobalDataAustralia 3%Hong KongIndiaIndonesiaJapanMainland ChinaMalaysiaSingaporeSouth Korea$2.8B$24B$5.5B(direct written premiums)$96B$150B$3.6B$3B$69B$32B 1%15%8%2%13%4%1%12%Concentrated market;top 4 insurers account for 60%of GWP Natural hazards drive property and casualty in
31、surance purchases;costs from disasters expected to double by 2050 Highly fragmented market;top 5 insurers account for about 30%of GWP Stable outlook given size and maturity of market Relatively concentrated market;top 5 insurers account for 53%of GWP;next 10 growing faster than market,taking share f
32、rom the top 5 Expected growth through online insurance,with new technology players entering the space Highly fragmented market;top 5 insurers account for 35%of DWP Low penetration;increasing awareness and infra-structure construction will continue to drive growth,but high risk of natural hazards rem
33、ains Highly concentrated market;top 3 insurers account for 80%of GWP,led by domestic players Limited growth expected;new growth driven by price changes and new product categories Concentrated market;top 3 insurers account for 60%of GWP Auto insurance accounts for 70%of policies written Strong growth
34、 expected given urban migration,but profitability struggling due to price competition Fragmented market;top 5 insurers account for 45%of GWP,comprising both domestic and foreign insurers Downward pricing pressure due to changes in auto and fire insurance premium rates Compulsory insurance continues
35、to drive future growth Fragmented market;top 5 insurers account for 45%of GWP,comprising both domestic and foreign insurers Premiums expected to be stable,with no significant drivers for growth Concentrated market dominated by domestic players;top 4 domestic insurers account for 70%of GWP Growth exp
36、ected to continue,driven by construction activity,compulsory insurance classes such as third-party liability for motorists,high insurance awareness and sustained economic growthGeneralinsurancemarketGross written premiums(unless otherwise specified),2017Annualgrowth,201317Highlights and outlookMakin
37、g the Most of Asia-Pacifi cs Insurance Boom6premiums for life insurance grew at a rate of 13%.Fast growth is likely to continue,due to rising incomes,increased consumer awareness of the value of insurance,high levels of urbanization,strong construction activity and frequent natural disasters.The mar
38、ket is relatively consolidated,with the top fi ve players(New India,United India,National,ICICI Lombard and Oriental)accounting for 53%of the general insurance market and government-owned LIC controlling about 70%of the life market.Reforms launched in India in 2015 have lifted the ceiling on foreign
39、 ownership of domestic insurers from 26%to 49%.In addition,the government has actively supported the microinsurance industry and has increased protections for consumers,by,for example,barring life insurers from unilaterally discontinuing coverage for customers who have held their policies for at lea
40、st three years.In the major developing markets of Southeast Asia,urbanization and population increases are driving strong demand for insurance.In Indonesia,gross written life insurance premiums grew at 11%annually from 2013 to 2017,but consumer awareness of the value of insurance remains low.The lif
41、e insurance penetration rate(gross written premiums as a percentage of per-capita GDP)is about 2%.The general insurance market is highly fragmented,with the top fi ve players accounting for just 35%of direct written premiums.Regulatory constraints limit foreign ownership to 80%of paid-in capital.In
42、the mature markets of Asia-Pacifi c,insurers must contend with slow growth or no growth.In Japan,net written life insurance premiums fell 1%per year from 2013 to 2017.Insurers are beset by an aging population,sluggish economic growth and near-zero bond yields.As the insured population becomes older
43、and sicker,the underwriting risks increase,forcing Japanese insurers to look for profi ts from asset management and noninsurance investments.Japanese insurers spent about$18 billion in mergers and acquisitions in 2018.In Australia,major banks have been offl oading their insurance and wealth manageme
44、nt businesses over the past two years due to lower-than-expected returns and changing regulations.The Royal Commission into Misconduct in the Banking,Superannuation and Financial Services Industry has recommended rules that will prohibit“hawking,”that is,the unsolicited selling of insurance products
45、.The commission has also proposed restrictions on the incentives fi nancial services companies can provide to employees for cross-selling products,which has prompted banks to pull back signifi cantly on sales of insurance policies through their branch networks.Two insurance markets in Asia-Pacifi c,
46、Singapore and Hong Kong,are mature in some respects but still developing in others.Both markets are competitive and highly fragmented.In both markets,general insurance growth has been slow and steady,expanding about 1%per year from 2013 to 2017.By contrast,demand for life insurance,especially from t
47、he affl uent segment,has been strong,with gross written premiums growing at 13%per year in Singapore and 15%in Hong Kong.Digital fi rstThroughout Asia-Pacifi c,incumbent insurers looking to expand must contend with a distribution landscape that is being upended by advances in technology and the rise
48、 of digital-fi rst competitors.Making the Most of Asia-Pacifi cs Insurance Boom7In fast-growing markets such as mainland China,India and Indonesia,insurtechs and other new entrantsincluding technology fi rms,retailers and other companies from outside the industrycan leapfrog incumbents and gain mark
49、et share.Digital marketplaces,which allow customers to easily compare and select policies from competing carriers,threaten to take a signifi cant share of the insurance profi t pool.In major markets around the world,a majority of retail insurance customersespecially young,digitally active onesare op
50、en to switching to another provider,including companies from outside the industry,such as retailers,automakers or tech fi rms,according to Bain&Companys fourth global survey of more than 174,000 customers in 18 countries(“Customer Behavior and Loyalty in Insurance:Global Edition 2018”).Asia-Pacifi c