Promising Insurance Industry to Boost Reinsurance in Malaysia: Ken Research
Ken research announced its recent publication on, "Reinsurance in Malaysia, Key Trends and
Opportunities to 2020 ". This
report provides a comprehensive analysis of the reinsurance segment in
Malaysia. It provides historical values for the Malaysian reinsurance segment
for the report's 2011-2015 review period, and projected figures for the
2015-2020 forecast period. It offers a featured analysis of the key categories
in the Malaysian reinsurance segment, and market forecasts to 2020. It provides
a detailed analysis of the reinsurance ceded from various direct insurance
segments in Malaysia, and the reinsurance segment's growth prospects. It analyses
various natural hazards and their impact on the Malaysian insurance industry Make
strategic business decisions using in-depth historic and forecast market data
related to the Malaysian reinsurance segment, and each category within it. It
can be used to understand the demand-side dynamics, key market trends and
growth opportunities in the Malaysian reinsurance segment and to identify
growth opportunities and market dynamics in key product categories. Finally, it
is well descriptive of the insights into key regulations governing the
Malaysian insurance industry, and their impact on companies and the industry's
future.
As part of its efforts to promote
the country and in particular the island of Labuan in East Malaysia, as new
financial centre, the Malaysian government has opened its doors to
international reinsurers and brokers. These entities, though, have to comply
with the provisions of either the Malaysian
Insurance Act or the Financial Offshore Act. The latter was promulgated
to govern the development of Labuan as the newest financial centre in the
region. Various incentives and benefits have been offered to attract overseas
companies to set up operations in this free port where no sales tax, surtax,
excise or import and export duties are levied. Among the overseas reinsurers
who applied for and were granted licenses under the Malaysian Insurance Act to
operate in Malaysia, based in the capital city of Kuala Lumpur are the Munich
Re, the Swiss Re, Employers Re, Hannover Re and Gerling Global Re and Toa Re.
These reinsurers are also expected to develop and bring in offshore or
non-Malaysian business as the intention is for their operations in the country
to be regional.
Other
reinsurers have also been licensed to operate in Malaysia under the Financial
Offshore Act. Among other provisions under this law, the reinsurers involved
must maintain a registered and manned office in Labuan. Presently, these
reinsurers are allowed to maintain a marketing office in Kuala Lumpur, subject
to labor restrictions and other regulations. Among the international reinsurers
who have received licenses to operate in Malaysia under this act are the AXA
Re, Copenhagen Re, Labuan Re, Sumitomo, SCOR, Tokio Marine Global Re and Partner
Re. Physical proximity of the local
offices of international reinsurers to the Malaysian insurance companies
obviously gives these reinsurers a great advantage over non-registered overseas
reinsurers in terms of access to Malaysian reinsurance business. In addition,
the guidelines issued by the Bank Negara, the insurance supervisory authority
in Malaysia, on general reinsurance arrangements to be followed by the
Malaysian insurance companies (issued 21st April 2000 and effective 1st June
2000) can be regarded as working in favour of the locally-registered
reinsurers.
These guidelines were issued, in
the words of the Bank Negara, to “promote the development of a sound and stable
insurance industry, in particular, a mature and dynamic reinsurance market; and
to “preserve the integrity of the Malaysian insurance market by protecting
insurers and ultimately policy owners, from solvency threats arising from
difficulties encountered in recovering reinsurance balances from reinsurers.”
The major sections of the guidelines cover the topics of Appropriateness of
Retention Levels; Security of Reinsurers; Spread of Reinsurers; and
Appropriateness of Reinsurance Contracts. Among the salient provisions of these
guidelines are:
• The reinsurer must be legally
set up in accordance with the laws of its home country and has been authorised
to carry on reinsurance business in other countries and Malaysia is not
precluded.
• The use of various tools and
publications to assess the capacity and financial strength of the reinsurer. In
the case of overseas placements, insurers must ensure that the reinsurers they
use for such placements must have a minimum of “A” rating by an accredited
rating agency or have a combined paid-up capital and surplus of at least USD
150 million.
• Total reinsurance cessions
(facultative and treaty) to foreign reinsurers should not exceed 50% of the
direct-writing company’s total reinsurance premium.
• No one foreign reinsurer shall
hold more than 25% of a risk in the case of a lead reinsurer and 10% of a risk
in the case of other participants
• In general, insurers shall
ensure that their reinsurance arrangements fall in line with national
aspirations and to the extent possible, accord priority to optimisation of the
Malaysian insurance capacity followed by Labuan, before securing foreign reinsurance
support. In addition, Combined Liability Excess of Loss covers are retained
almost 100% within the country.
Hence,
even without restrictions on the amount and kind of business, which can be
reinsured overseas, it is apparent that less and less business will come out
from the Malaysian market. With the strengthening of the Malaysian domestic
reinsurance market, Malaysia, through its locally registered reinsurers and
intermediaries, is able to attract inward business from overseas and is able to
challenge Singapore and Hong Kong to become the newest regional reinsurance centre
for Southeast Asia.
Warren Buffett’s Berkshire Hathaway is set to enter the Malaysian
reinsurance market, having received a license from Labuan FSA to provide
non-life products in the country, through its Berkshire Hathaway Specialty
Insurance Company (BHSI) arm. Berkshire Hathaway has been expanding steadily
into Asian and Pacific insurance and reinsurance markets, as the firm seeks to
diversify globally and source premiums from the faster growing markets of the
world. After putting down roots in Singapore, Hong Kong, and Macau, they feel
pleased to further expand their operations in Asia and bring facultative
reinsurance capacity and new products with the backing of our strong balance
sheet to selected Malaysian insurance partners. With the opening of Malaysian
office, they shall continue to deepen the underwriting and claims capabilities
in this region. Now with license to sell reinsurance in Malaysia in hand,
Berkshire Hathway has established an office in the capital Kuala Lumpur, naming
Gaithrie Nandrajog as Branch Manager and Koo Kang Wuu as Executive &
Professional Lines and Business Development Manager. Through this Asian expansion
Warren Buffett is laying a framework to provide its insurance and reinsurance
products more widely into these markets, which is essential if the firm is to
take advantage of economic and industrial growth in the region.
Key Topics Covered in the Report:
Non-life
insurance industry
Global
life insurance
Life
insurance businesses
Insurance
sector worldwide
Malaysia
non- life insurance market research
Non-Life
insurance sector trends Malaysia
Malaysia
General insurance regulations
Motor
insurance market research Malaysia
Property
insurance sector Malaysia
Health
insurance demand Malaysia
Malaysia
automobile industry research
Malaysia four wheeler demand
For more coverage click on the link below:
Contact Us:
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249
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