Increased regulations for the insurance industry, which have become more pronounced after the global financial crisis, will be a key challenge for the industry, according to the PricewaterhouseCoopers executive director Angie Wong.
“The future is not what it used to be as the environment in which excutives had spent most, if not all of their careers, is changing.
“We should take sight of the continued challenge to the industry,” Wong said in her speech at the 26th East Asian Insurance Congress here yesterday.
She said based on the findings of PwC's Global CEO survey, dealing with the immediate pressure of market volatility and regulatory upheaveal had left little space on boardroom agendas to think about how to sustain competitive growth in the years to come.
Wong added that economic uncertainties were the “greatest threat to growth” in the short term and that the tough operating environment was set to continue in the foreseeable future.
“This significantly hinders the business planning process. Over-regulation and capital demands are also key factors in determining business plans for the future and providing impetus to the continuing overhaul of risk and capital management.”
However, Wong acknowledged there were some insurers who viewed the extra regulations as being beneficial. Against this backdrop, Wong added that there was a need for insurers to begin to be innovative to differentiate themselves from the pack.
Bank Negara governor Tan Sri Zeti Akhtar Aziz said in her opening speech that the insurance industry was at an intersection of major regulatory developments due to the impact from the global financial crisis.
“The crisis has also delivered a major blow to confidence in financial institutions. This needs to be regained.
“Both these factors will have an important influence on the way in which the industry responds to new insurance and asset accumulation opportunities in Asia.
“We can expect that the characteristics of growth in the industry going forward will therefore differ in some respects from the historical experience.
“Going forward, innovations in insurance solutions will also need to take into account the higher regulatory expectations for more transparency,” she said.