Posted on Jun 08, 2012 by Sergio Ulloa
As Europe remains to be a place of economic uncertainty, Asia continues to provide Health insurers opportunities for investment and expansion.
Asia is home to the largest number of high net worth individuals and with 3.3 million people now owning liquid assets worth at least USD $1 million, the continent has overtaken Europe and is second only to North America in terms of wealth.
Several of the less developed countries in Asia in particular though, are showing significant amounts of promise and could be the escape route established international companies need to avoid the financial quagmire in much of Europe and the USA.
carried out by economic consulting firm, Nathan India, has indicated that one in 10 people living in India could end up buying health insurance products by 2015, inevitably increasing the existing 2 percent of the entire population to 10 percent.
As greater numbers of the country's population are becoming increasingly aware about health insurance and the benefits it can bring, it is predicted that the industry will grow from USD $1.6 billion to $7.6 billion by 2015; the Indian health insurance industry witnessed a growth of 36.9 percent in 2011.
Those considered most likely to purchase health insurance products are those who are married, have a graduate degree and have a steady income. As India continues to bloom in business, these sectors of the population will surely continue to grow alongside the nation's GDP.
The Indian health insurance industry has already been experiencing a steady growth over the past 6 years and so far, growth has mainly been concentrated within the public sector of the market where companies such as New India, United India Insurance, National Insurance and Oriental Insurance have all played significant roles.
Improvements in Information Technology have played their part too, and more companies have developed e-platforms which have enabled individuals to understand more about insurance coverage and compare different plans and policies.
Some international insurance giants have honed in on the vast potential in the Indian market and companies such as Star Health, Apollo Munich and Max Bupa already have a strong foothold in the private sector and are witnessing a growth in the number of Indian hospitals registering with them.
In the meantime however, the Joint venture of ICICI Lombard between India's ICICI Bank Limited and Canadian Fairfax Financial Holdings Limited still hold the title of largest providers of general insurance in the private sector.
Sri Lanka has experienced similar growth patterns in the insurance industry recently and also shows great promise for growth.
According to the Insurance Board of Sri Lanka (IBSL), the gross written premium of the country's insurance sector rose 18.5 percent last year to USD $464.4 million dollars with general and life insurance sectors recording the most substantial growth.
The IBSL regulates 21 insurance companies which are separated into the combined general and life insurance, and life insurance. The total assets of these companies was USD 2.3 billion last year and this is a marked improvement from the USD $1.7 billion they witnessed in 2010.
May 2009 marked the end of the 26-year armed conflict in Sri Lanka, and since then the nation has been on the right path to becoming a middle income country. To ensure it continues on in this direction, Sri Lanka is focusing on long-term solutions and is looking towards international markets more frequently.
Several international insurance names have sought out such investment opportunities in Sri Lanka and even though British Aviva has had to put its share in Sri Lankan based Eagle Insurance on the auction block, other insurance giants such as Manulife financial and Prudential are likely to be among potential bidders and could continue to inject the industry with the financial boost it requires.
The Asian market in general, whilst offering great promise, is a tricky arena to enter. One reason is as previously mentioned; very wealthy individuals live alongside those who are not so fortunate. As a result, it is a challenge for insurance companies to reach all audiences and experience sufficient growth which could explain why some international companies are less inclined to experiment with Asia and concentrate on maintaining their existing performance levels instead.
When trying to target those in the higher end of the personal wealth scale though, many local insurers in Asia struggle as they do not appear to have the underwriting experience and expertise required when dealing with the higher level claims that are expected by individuals with a large net worth.
This is where acquisitions and mergers with global companies are much appreciated and where great opportunities lie for foreign investors.
It has taken a few years to really get going, but the market for insurance products targeted at high net worth individuals is certainly growing and some life insurers are flagging this area in particular as their focus area for significant growth.
AXA in particular hopes to develop substantially in this area after its acquisition of HSBC's general insurance business in both Hong Kong and Singapore while AIA has already proved it has a good grip on the high end market situation and is moving in a positive direction.
Asia appears to be continuously developing at both ends of the wealth spectrum, more so than other continents it would seem and it therefore remains to offer great opportunities to both local and international insurance companies alike who are looking to experience expansion and significant growth levels.