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The Actuary The magazine of the Institute & Faculty of Actuaries

Going global

From 7 to 10 October this year almost 500 actuaries from Asia and around the world gathered at the biennial East Asian actuarial conference in Hong Kong to share ideas and promote the profession. This year’s theme was ‘Go global’, reflecting both the increasing involvement of global insurers and their actuaries in Asia, and the need for the Asian insurance industry and local actuaries to respond to global influences. The theme was also very much in keeping with the Hong Kong government’s desire to establish Hong Kong as ‘Asia’s world city’.

Raised awareness
The conference was privileged to secure Antony Leung, financial secretary of Hong Kong, to give the opening speech. This was Mr Leung’s first engagement of the day and he was obliged, presumably for the benefit of the assembled press, to affirm the Hong Kong government’s support for the military action in Afghanistan that had begun overnight and of which many participants were still unaware. Mr Leung proceeded to argue that the recent perceived increase in the level of risk in the world had at the very least raised awareness of the need for insurance, with the provision of this insurance depending critically on the skills of actuaries.

Market update
There followed an update on the insurance markets and actuarial developments in the EAAC territories of Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, Korea, Taiwan, and Thailand the potential giants China and India are not members, although they sent representatives. Statistics showed that despite some rapid growth elsewhere, Japan’s premium income for both life and non-life was still more than three times that of the others, even with China and India included. Indonesia, with almost double Japan’s population, has only 0.5% of its premium income. Although regulatory regimes differ widely, the trend in the region is clearly towards liberalisation. An example is the gradual dismantling of non-life tariffs. It is hoped that this will result in more actuarial involvement in the region’s non-life business, as will the moves by some regulators for example in Japan and Singapore to introduce actuarial certification of non-life reserves. In terms of professional developments, CPD requirements are sweeping across Asia, as elsewhere.

Concurrent sessions
More than 70 papers were presented at the concurrent sessions, covering a very full range of actuarial topics. Asia, in common with most of the rest of the world, has been experiencing very low interest rates, which prompted a raft of papers seeking to address the related issues. Stochastic modelling received a lot of attention, as did the development of unit-linked or ‘variable’ products, which are rapidly gaining in popularity as the region’s insurers and regulators seek to reduce the burden of guarantees.
There was the perennial debate between those who were optimistic about the immediate prospects for alternative distribution and those who were not. Closing speaker Patrick Poon, among others, reminded us of the importance of personal relations in doing business in Asia. While this might not bode well for e-business prospects, it may assist banks who are gaining market share in a number of territories, albeit from a low base relative to the UK, for example.
Consolidation is something else that is always supposed to be just around the corner but which has certainly arrived in Japan and Korea, where it has been triggered by the financial distress of local companies. Speakers reminded us of the need for actuaries to be at the forefront of the process surrounding transactions, providing full professional advice, rather than being relegated to doing calculations for often relatively ill-informed investment bankers.
Nothing better illustrated the ‘Go global’ theme than the coming revolution in insurance accounting, which was the subject of several contributions. This did not, however, stop the US GAAP sessions from being packed to overflowing, as participants sought to acquaint themselves with what they needed to know for today, rather than for tomorrow.

The challenge
Across the region there is a reassuring trend for actuaries to be asked to do more whether by regulators or by individual companies. The challenge for the region’s actuaries is to cope with this increased responsibility.
The conference was made possible by the generous financial support of a number of sponsors, including the main sponsor, AXA.