Trends in Asian insurance 2009

Asia is the world’s most rapidly growing economic region. Many Asian countries recorded high economic growth rates before the global crisis. Generally, the majority of the countries in the area produced GDP growth rates of between 4% to 8%. China has the fastest growth, over 10%, while growth rates for India and Vietnam were between 8% and 10%. However, the financial crisis in the US and Europe has seriously impacted economic development in the region with the result that personal saving rates have declined and the demand for insurance products has weakened. According to Weli Yuan, senior analyst in the Asia Research Group of technology research and advisory firm, Celent, the global economic downturn is producing a number of changes in the regional market. These include a shrinking demand for non-life insurance products, while an increasing number of life insurers are now offering basic protection and health insurance products in order to attract the attention of customers. With unfavourable insurance investments, in particular, and the global financial crisis more generally squeezing insurers’ profits, companies, in addition to increasing the prices of some insurance products, are also seeking effective ways to lower expense ratios and operating costs to remain profitable. Insurers are also paying much more attention to risk management. The trends discussed in this article reflect Celent’s view of the market based on ongoing discussions with the industry, and based specifically on interviews with Asian chief information officers at the end of 2008. These interviews covered new project spending, as well as details around budget allocation, architecture strategy, standardization, web services and SOA, and the insurance IT vendor market.

The global downturn has had a significant impact on the economies of the Asia region.