Peak Re publishes Peak Insights 2019

17 Oct 2019

Highlighting access challenges to financial services in emerging Asia and the opportunities that come along for the insurance industry

  • The emerging middle class in Asia is underserved by both the social welfare system and the financial industry.
  • They are more vulnerable to financial distress as they are not well protected financially and hold a percentage of illiquid assets such as livestock, jewellery and property.
  • They rely primarily on emergency funds (own savings and income, borrowings and disposal of assets) to finance sudden large expenses, long-term care costs and retirement.
  • Not all households have a bank account. Thus, cash is the preferred option of payment for premiums and for receiving claims for those excluded from the financial infrastructure.
  • Since the emerging middle class are more likely to face cash-flow and liquidity issues, fast claims reporting and settlement are key elements contributing to trust and insurance purchase.
  • Beyond traditional covers, insurers can be more innovative creating products based on the households’ priorities, saving ability and methods.

Peak Reinsurance Company Limited (“Peak Re”), a Hong Kong-based global reinsurer, published Peak Insights 2019, analysing the financial aspirations and priorities of emerging middle class in Asia, and the many vulnerabilities that could thwart their financial resilience.

Entitled “Access challenges to financial services in emerging Asia: an opportunity for now”, the report highlights that the emerging middle class in Asia are in general underserved by both the social welfare system and insurance companies. Emergency fund, coming from their own savings and income, borrowings and disposal of assets, is still the primary source of funding to cover unexpected large expenses. Emerging middle-class households may have limited access to financial services, which leaves them with insufficient financial protection and under prepared for sudden large expenses, exposing them to the risk of falling back into poverty.

“Without sufficient financial protection, the emerging middle-class households can easily lose financial security and have to accumulate wealth again. And they are facing more difficulties in managing and building wealth compared to more financial resilient households,” says Arina Tek, Vice President, Market Research and Analysis at Peak Re and author of the report.

While public schemes play a substantial role in protecting the lowest-income households, the report finds that the emerging middle class seems to be left behind, with some households even no longer eligible to benefit from free public schemes.

“The private sector can and must cater to the growing and more complex protection needs of the emerging middle class. To attract more households to purchase insurance, intermediaries and risk carriers need to promote risk prevention and mitigation tools, facilitate access to financial protection tools and increase these households’ trust in insurance,” states Ms Tek.

The report suggests insurance companies rethink their approach to emerging middle class, taking into consideration their saving patterns, vulnerabilities and real needs. Providing professional distribution channels to these communities will increase their willingness to purchase insurance. Fast claims settlement, on the other hand, will protect them from the deterioration of their financial safety net as most of them are holding low-liquidity assets.

“Our company was established with the aim of supporting the needs of communities and the emerging middle-class society through meeting reinsurance needs, especially in Asia. This edition of Peak Insights underlines our unabated commitment to investing in research and sharing its findings with our business partners and the public at large,” says Franz Josef Hahn, Chief Executive Officer of Peak Re.

Notes to editors

Middle class in this report adopts the definition of The Brookings Institution, referring to the households with an income between USD 11 and USD 110 per person per day in 2011 Purchasing Power Parity terms.

The emerging middle class comprises low-income and lower-middle income households. Peak Re defined the emerging middle class on the basis of their spending aspirations.

Click to access the full report.


About Peak Re

Peak Reinsurance Company Limited (“Peak Re” or “the Company”), authorised by the Insurance Authority of Hong Kong, is the only privately owned global reinsurance company headquartered in Hong Kong. It is also one of the few locally established reinsurance companies in Asia Pacific, underwriting both life and non-life reinsurance business.

With a shareholder equity of over US$1 billion as of 30 June 2019, it enjoys an “A-” rating by A.M. Best, a leading international insurance industry credit rating agency, and ranks among the top 34 global reinsurance groups in terms of gross written premiums*.

Peak Re strives to provide innovative and forward-looking reinsurance services for customers in the Asia Pacific, Europe, Middle East and Africa and the Americas. It tailors risk transfer and capital management solutions to best fit clients’ needs.

Fosun International Limited (00656.HK) and Prudential Financial, Inc. hold approximately 87% and 13% of Peak Re via Peak Reinsurance Holdings Limited, respectively.

* Source: A.M. Best Top 50 Global Reinsurance Groups 2019

brand-arrow

Media Contact

Media


Peak Reinsurance Company Limited

E: [email protected]