'Korean insurers to benefit from tapping ASEAN markets'

By Chung Ah-young

Clarence Wong

Korean insurance companies will benefit from tapping Southeast Asian markets as the countries plan to form a more integrated economic community around 2015, said Clarence Wong, Swiss Re’s chief economist in Asia.

“The Southeast Asian markets have been growing fast over the last decade. They have very strong economic fundamentals,” he said in a recent interview.

Wong said that by the end of 2015, member countries will create the ASEAN Economic Community or AEC for economic integration and liberalization.

“It will not immediately transform the insurance industry in ASEAN. But the members have aspirations of liberalizing the insurance market in their region over the next five years,” he said.

ASEAN currently has a population of approximately 610 million, the third largest after China and India, and is the seventh largest economy in the world.

“South Korean companies can leverage their experiences in penetrating the ASEAN market. It is time for Korean insurance companies to better understand how this ASEAN community will work in the future and what kinds of opportunities there will be,” he said.

If a company is set up in one of the ASEAN countries, theoretically in the best case scenario, it can sell products to all member states, he added.

The AEC is expected to be a free trade area in the region for the free movement of goods, services, investment and labor, and the flow of capital with its neighboring countries including China, South Korea, India, New Zealand and Australia.

Once this free trade area is to be established, it will be the biggest trading block in the world ― although it is still in its very early stages, he said.

The Korean government should be supportive of Korean companies expanding and investing in overseas markets, he noted.

He said the general trend is liberalization in the whole Pacific region, including Japan and China and India as well as Singapore.

“It’s not just the insurance industry in Asia which is going through liberalization. I guess the whole financial sector is going through liberalization. Of course, this liberalization is becoming more cautious. If South Korea is not going to liberalize the finance sector, it will be lagging behind,” he said.

Alex H.S. Lee, head of the Korean branch of Swiss Re, said that the reinsurance market in Korea is no longer a small player in international markets, citing that the local industry is the eighth largest in terms of premium value.

“The reinsurance market is very much related to insurance premiums. The insurance industry in Korea is relatively big, but recently we have had big accidents which are not fully covered by insurance or reinsurance. It means we can see a lot of potential in the future as well,” he said.

The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer.