Singapore stakes its claim for regional dominance
Kevin Richmond, Insurance Products director, Eurobase, outlines the role of technology in helping Singapore realise its market aspirations
Singapore is on its way to becoming a major player in the international insurance market and there are huge plans for its future growth. This prime location continues to attract brokers and underwriters, largely down to its excellent geographical links with South East Asia, its stable economy and government, its respected regulatory regime and the first class technology infrastructure.
New businesses looking to start up in Singapore are in a great position to exploit technology to help them succeed on the international stage. The workforce is highly educated and extremely aware of the importance of IT, enabling them to embrace and implement the latest developments. This, coupled with a faster bounce back of Asian economies following the recession, has in turn put pressure on existing organisations to consider how they can improve their stance in the market.
Technology paving the way for all market players...Now more than ever, businesses will need to implement critical technology processes to help shape Singapore’s future. To support this expansion, technology must be used to create flexible business processing platforms that deliver quickly and easily to the right locations, and to handle localisation issues such as taxation and regulation. There is a distinct preference for technology platforms that can deal with multi-lingual requirements.
The traditional international players such as Lloyd’s especially need to ensure they keep their market presence whilst there is a rise of new insurance businesses. With increasing pressure from the newcomers, they have recognised the importance of getting closer to their customers and offering more tailored products and services. For example, increasing numbers of Lloyd’s Syndicates have established local service company operations within the Lloyd’s Asia platform.
Another key factor that is recognised by old and new alike is the combination of local knowledge and international expertise in order to construct and communicate their products and services to the market effectively. This means that there is a significant need for their technology processes to be able to adapt accordingly. This is an area where the new businesses can have a distinct advantage, because they are unencumbered by legacy issues. The traditional international players who come into Singapore are often restricted by the established methods and processes imposed by their parent organisations in aspects such as risk assessment, pricing and technology. For example risk assessment and pricing can be influenced by global factors that are not relevant to Singapore, because major international players may take into account their worldwide business portfolio in areas such as target exposure and loss ratios. Local and regional businesses based in Singapore can tune in to the nuances of the Asian market and thus differentiate their offerings, which leads to different prices, terms and conditions but not always cheaper or better ones!
From a technology stand point, international players have often made the mistake of thinking that existing systems already in use can be deployed quickly and easily. In fact, transposing systems that are based upon market and regulatory practices from other parts of the world has in some cases proved to be a hindrance because they also rely on older technology with an inherent lack of flexibility.
Pertinent technology can give innovative insurers and reinsurers the opportunity and flexibility to leverage new opportunities. One example of a business partnership where a strong technology basis is set to drive success is the collaboration recently announced between RMS and ACR based in Singapore. They plan to develop catastrophe models which are relevant to the Asia market, aiming to help develop a deeper understanding of risks in the region and address gaps where greater insight is needed.
The new Singapore...Whilst Singapore has the underlying key components to become a major force within the Insurance Market and really hold its own, this will only be achieved with a deeper understanding of the local and international opportunities supported by a flexible core technology infrastructure which can be readily adapted.
For Singapore to carry on growing and to compete in other insurance markets there will have to be an increase in the use of international technology standards for insurance, such as Acord. These standards will enable businesses to trade electronically using a more efficient process model, keeping the costs down and facilitating the delivery of products to a wider international audience. The standards will need to deal effectively with the geographic and economic diversity of the Asian market, which may require further adaptation of the current versions, but modern technology is more than capable of responding to the challenge.