IFoA Asia Conference 2023

Plenary 1: Fairness in insurance: Towards a sustainable future for consumers and the role for takaful

In a report by the IFoA, The hidden risks of being poor: the poverty premium in insurance, the poverty premium was defined as the ‘extra costs incurred by low-income households when purchasing the same or similar essential goods and services as households on higher incomes’. In insurance, and from the consumers’ perspective, fairness is accessibility to an affordable level of cover that ensures they are protected from unexpected shocks. This is different to an insurer’s perspective, which views individualisation of risks to be fairer, specifically that consumer’s premium should reflect the level of risk.

This presentation looks at an alternative perspective to the pooling of risks, that of risk sharing rather than risk transfer. It considers how takaful can be nurtured to minimise the poverty premium.

Panellists:

• Zainal Abidin Mohd Kassim, Senior Partner, Actuarial Partners Consulting
• Wan Saifulrizal Wan Ismail, CEO, PruBSN Takaful Berhad
• Shamsul Azman Alias, CEO, Zurich General Takaful Malaysia
• Kartina Tahir Thomson, Senior Director WTW (UK), IFoA President Elect

Plenary 2: Closing the climate protection gap using parametric insurance and blockchain

Smallholder farmers in Sub-Saharan Africa (SSA) are among those least responsible for the climate crisis, but most vulnerable to its devastating effects. Insurance is still too expensive – and slow. In SSA, out of 270 million smallholder farmers roughly 97% remain uninsured. Even where insured, despite being parametric products, payouts often take 3-6 months, which is not helpful for farmers who need prompt financial support.

How can we make climate risk insurance better for those who need it most, but still a viable business? This session will cover:

• Parametric insurance and closing the climate protection gap: theory vs. practice
• How can blockchain and smart contract automation make insurance faster, more affordable and transparent?
• Learnings from Etherisc’s experience in Sri Lanka and Kenya
• Looking ahead: what solutions?

The speaker will draw on his years working in inclusive insurance and share Etherisc’s experience in implementing digitally enabled climate risk insurance. This session is for all actuaries keen on applying new technologies to improve insurance service delivery and enhance access to insurance.

Speaker: Hui Lin Chiew, Etherisc Impact BV

Workshop A1: Is risk-pooling in voluntary medical insurance sustainable?

At older ages, risk pooling breaks down as a small proportion of healthy lives are asked to support a large proportion of unhealthy lives. This talk examines the tools and skillsets insurers will need to develop in order to manage an elderly portfolio, providing case studies along the way.

At the core is understanding the health status and longitudinal cost of profile of different diseases, followed by putting in place the risk management initiatives needed to manage the medical costs of unhealthy lives, including reinsurance, disease management and catastrophic case management programmes. The session will also examine potential changes to rating structures and the participation of government and high-risk pools to ensure older people receive the care they need without over-burdening the public health system. The ability to understand and insure unhealthy lives also enhances the ability of insurers to rate and underwrite unhealthy lives at the outset.

Speaker: Pang Chye and John Chin, Milliman

Workshop A2: Risk-based solvency in Asia – latest updates and a guide for insurance groups

The solvency capital landscape of the Asia insurance sector continues to develop, with many markets currently transitioning, or already transitioned, to a risk-based solvency system.

While the move to risk-based solvency is a much-needed change, and is intended to improve comparability across markets, there are some notable differences, with several markets having differing, well-developed three-pillar frameworks, while others will likely maintain a factor-based or other system.

In this presentation we provide an update on the latest regulatory solvency capital developments, draw out key comparisons of the different regimes and review the drivers of any likely further changes in the coming years. We also consider the implications for insurance groups based in the region, reviewing some recent experiences, and discuss how we expect insurance groups to handle these challenges over the next few years.

Speaker: Dhiran Dookhi, Deloitte Advisory HK

Workshop A3: Actuaries as valuable partners: propelling reinsurance team success

The session will begin with an introduction on how reinsurance capacity reduced during 2023 and perspectives into 2024. It will describe the key structural features applied to reinsurance treaties in order to make their price acceptable by the reinsured.

It will then highlight the impact of such features on the expected ceded claim experience. Taking the audience through a series of case studies, the workshop will explain how actuaries can jump in and help the reinsurance team assess the impact of different proposed structures on company performance and financial strength by making an assessment using the results of deterministic scenarios or stochastic models. This will cover some non-proportional treaties features, as well as select proportional ones.

Speaker: Valerie Gilles-Coeur, Structurer, Swiss Re

Lunch kindly sponsored by RGA

Professional skills 1 – In conversation with Datuk Kamarudin Meranun

IFoA President-elect Kartina Tahir Thomson will be joined by Datuk Kamarudin Meranun, Co-Founder of AirAsia, Executive Chairman of Capital A (formally known as AirAsia Group), and CEO of Tune Group.

It began with 1 ringgit, 40 million in debt, and 2 airplanes. Today, AirAsia has cemented its reputation as one of the world's biggest low-cost airlines, a brand that has changed Asia forever.

Join us along this journey in getting to know the man behind the brand - his insights and experiences as well as his beginnings as an Actuarial Science student that has helped contribute to some of his successes.

Why and how did he purchase Air Asia for RM1 before turning the company into a multinational fleet, painting the skies red?

Learn more about the key factors that contributed to his continued success, his view and approach to continuous learning, and Datuk Kamaruddin's 'Dare to Dream' spirit that has kept him going.

Plenary 3: Making financial sense of climate change

This panel discussion will explore the financial implications of climate change on insurers and how risk management frameworks need to evolve in response. Fresh insights from regulatory and risk practitioners and actuarial perspectives on the subject will make an engaging conversation.

We expect much food for thought for those working across areas including policy, strategy, risk, and product domains.

Moderator: Yew Khuen Yoon, PwC Malaysia

Panellists:

• Wai Yi Lee, Monetary Authority of Singapore, speaking about a ‘regulator’s journey in understanding and managing climate risk’
• Lawrence Habahbeh, HedgeGenomics, speaking about a ‘framework to analyse the financial effects of climate change’
• Delvin Cai, PricewaterhouseCoopers, speaking on ‘integrating climate data and analytics into actuarial product development’
• Sandy Trust, M&G

Workshop B1: Analysis of diabetes and mortality risk

People with type 1 and type 2 diabetes run a greater risk of developing one or more severe health complications, including cardiovascular disease and cerebrovascular disease. Diabetes is also a leading cause of blindness in working-age people and a common cause of kidney failure.

Life expectancy following a diagnosis of diabetes has historically been lower than in those without diabetes. This is because inadequate glycaemic control gives rise to several complications that cause premature death, along with increased risks of long-term disability.

The IFoA Diabetes Working Party has produced a paper that includes a comprehensive review of medical literature and a global underwriting survey. Our literature review covers mortality, morbidity, and Covid-19 infections for people with types 1 and 2 diabetes and pre-diabetes. We have also undertaken a global underwriting survey where we compare and contrast underwriting practices and draw out key messages. The survey covered UK and Ireland, mainland China and the rest of Asia. The working party was also involved in initiating an important project commissioned by the Actuarial Research Centre carried out by University of Leicester. We will provide an update on this work and what the aims are.

Speakers: Joey Zhou; Scott Reid, Zurich; Jon Lambert, Swiss Re

Workshop B2: Risk-integrated credit modelling

As the dynamic and volatile economic and market environment of 2022 continues, central bank policy, the interest rate environment and trends in global economic conditions are still unknown and big topics for insurers.

Combined with the effect of IFRS 17 and new solvency regimes across the region, a consistent and sophisticated framework, along with more granular credit modelling to enable insurers to understand their portfolio and associated risk/return relationship, is needed.

This presentation will focus on how a risk-integrated model with granular credit risks and market risk modelling can help insurance companies in their application of ALM/investment analysis. This session should be of interest to actuaries responsible for market risk/credit risk management and ALM/Investment areas who are focusing on how to better manage the risk-and-return relationship of their portfolios.

Speakers: Greig Smith and Warren Fok, Moody’s Analytics

Workshop B3: ‘Actuary 3.0’: actuaries and technology

Excel was launched by Microsoft in 1985 and actuaries quickly adopted it as their software tool of choice, relying on its flexibility to create actuarial models. According to the Casualty Actuarial Society’s Annual Technology Survey, over 94% of actuaries reported that they use Excel daily. ‘Actuary 1.0’ had limited reliance on programming skills. But as the insurance industry became more complex, insurers started to invest in enterprise-grade actuarial software.

‘Actuary 2.0’ evolved as an expert user of such software tools. However, while some aspects of the actuarial process moved to cloud-based enterprise platforms, other components remained in Excel, as the vision of a ‘single platform’ was unreachable for most insurers. We are now seeing the emergence of ‘Actuary 3.0’, combining traditional insurance domain expertise with openness to connecting with the exciting new technologies that are readily available and easy to use.

This session will include practical examples of ‘Actuary 3.0’ in action. This session is suitable for all actuaries who aspire to get the most out of current and emerging future technologies. Challenge yourself: are you an Actuary 1.0 ,2.0 or 3.0?

Speaker: Bob Charles, Coherent

This drinks reception, kindly sponsored by Milliman, will be an opportunity to network with fellow actuaries and industry leaders.

Plenary 4: Why insurers fail

Moderator​: Rob Malattia FIA, Partner, NMG Consulting​

Panellists:

• Alister Campbell, President and CEO, PACICC (Property and Casualty Insurance Compensation Corporation)​
• Wan Ahmad Ikram, Executive Vice President, PIDM (Malaysia Deposit Insurance Corporation)​
• Grant Kelly, Vice President, Regulatory Affairs and Financial Analysis, and Chief Economist, PACICC (Property and Casualty Insurance Compensation Corporation)​
• Sivaraman Kumar, Partner, Ryskk Ltd​

Plenary 5: Climate risk for insurers

Regulators in the APAC region are expecting insurers to perform ever more sophisticated scenario analysis and stress testing to measure and manage the impact of climate change on their assets and liabilities. While many insurers have started on this journey, the development of stress testing approaches across the industry is still uneven and diverse. Even those that have undertaken initial stress tests, struggle with data, methodology issues, differing regulatory expectations across the region and internal capability gaps.

This session aims at level-setting the current status, and explores approaches and options for insurers. It will also discuss the evolving regulatory landscape in APAC and beyond.

Moderator: Junaid Iqbal, FIA FRM, Director, Sustainability, AIA Malaysia

Panellists:

Cindy Siah, Director of Prudential Financial Policy, Bank Negara Malaysia
Regulatory Perspectives on Climate Risk

Wolfram Hedrich, Partner, Financial Services Consulting, EY 
Climate Risk Stress Testing

Teresa Wong, Chief Risk Officer, P&C Segment/Head of Sustainability Risk, Zurich Malaysia

Workshop C1: Navigating the cyber insurance landscape – opportunities and challenges in the Asia-Pacific region

This presentation provides a comprehensive overview of the cyber insurance landscape in the Asia-Pacific region, with an emphasis on opportunities and challenges.

It will:

• explore the global cyber insurance market, highlighting key trends and the role of analytics in risk assessment and pricing models
• dive deep into the Asia-Pacific context, examining its specific cyber threat environment and cyber insurance uptake
• discuss the unique opportunities presented by the Asia-Pacific market such as a growing digital economy, increased awareness of cyber threats, and untapped potential in emerging markets

The presentation will also analyse the challenges that insurers face in this region. Examples are lack of historical data on cyber incidents, evolving and diverse regulatory frameworks, and cultural factors that affect the perception and adoption of insurance.

Finally, the session will provide strategies for capitalising on growth opportunities and overcoming challenges in this market.

This presentation offers valuable insights for reinsurance brokers, insurers, and other stakeholders seeking to capitalise on the burgeoning cyber insurance market in the Asia-Pacific region.

Speaker: Sie Liang Lau, Executive Director, Head of Analytics, Rest of Asia, Gallagher Re

Workshop C2: Weather perils and carbon policies: exploring climate-scenario analysis

There is much uncertainty surrounding the timing and severity of climate impacts. It is necessary to consider a range of possible scenarios that can challenge current assumptions and inform business decisions.

This session will delve deeper into the conduct of climate scenario analysis and discuss the latest regulatory and reporting requirements. It will cover:

• constructing climate scenarios and assumptions
• modelling climate physical risk under extreme weather events
• modelling climate transition risk under carbon pricing and policies
• generating insights and mitigation actions around climate risks and opportunities

Speaker: Timothy Cheng, HSBC

Workshop C3: Role of takaful in a sustainable finance ecosystem

This session will give a brief overview of societal finance schemes reflecting takaful and sustainability. This is also related to Maqasid Shariah, sustainability and takaful concepts that are intertwined in Islamic finance.

As part of the session, the Malaysian Takaful Association (MTA) will speak on its value-based intermediation framework: unlocking the potential of takaful industry towards a sustainable finance ecosystem.

Speakers: Dato’ Syed Moheeb Kamarulzaman, Chartered Institute of Islamic Finance; Radzuan Mohamed, Malaysian Takaful Association

Lunch kindly sponsored by Malaysian Life Reinsurance Group

Plenary 6 part 1: Navigating the uncertainties: insights into Cl for a sustainable future

The sustainability of insurance products, particularly in the context of critical illness coverage, has become increasingly crucial. As awareness of illnesses grows and medical technology advances, it is essential to understand and address the uncertainties surrounding the sustainability of critical illness insurance.

In this enlightening session, speakers from Gen Re will share invaluable insights gained from their experience in China, Hong Kong, Malaysia and Singapore. By delving into the development and recent market dynamics of these regions, they will shed light on the challenges and opportunities in ensuring the sustainability of critical illness insurance.

Moderator: Des Thomas, Asia - Met Life

Speakers: Orchis Li and Wendy Low, Gen Re

Plenary 6 part 2: The mental health map

This second half of the plenary will discuss:

• overview of clinical background of mental health (including prevalence and key clinical information about the disease spectrum)
• current landscape of diagnosis, care and treatment in Asia (with some particular examples from Hong Kong, China, and Southeast Asia) with some comparison between ages and location
• future direction: existing coverage, potential gaps in the market, and opportunities for insurers to help to make financial protection accessible to all

Moderator: Des Thomas, Asia - Met Life

Speaker: Dr SiNing Zhao, Regional Medical Director, Asia - RGA

Workshop D1: Utilising NLP and ML technology in reg-tech applications

We have developed a quantitative model founded on machine learning, which centres around unearthing pivotal commonalities among target companies. By customising the learning process to encompass selected indicators and a roster of target companies, our model presents the crucial determinants and showcases concise representations of their shared characteristics.

In order to leverage the vast amount of unstructured data available in the public market, we have expanded our model to incorporate natural language processing (NLP) techniques. By employing named entity recognition, our model identifies key entities such as company profiles and financial terms, simplifying the extraction of vital information. These capabilities empower investors and regulators to efficiently examine both financial and non-financial details of companies, freeing up time for more in-depth analysis. Furthermore, utilising NLP technology enhances objectivity by reducing reliance on subjective interpretations. It also uncovers hidden patterns and extracts relevant factors that may have an impact on investment decisions.

Speakers: Muqiu Liu and Estelle Xu, Delta Analytics

Workshop D2: Managing participating funds in run-off

Participating (‘par’) business has been a significant portion of life insurers portfolios across Asian markets for many years, but as products and customer preferences evolve demand for par business could decline. This has been the experience in the UK, where sales of par business has declined rapidly since the early 2000s.

While sales of par business in Singapore and Hong Kong have continued to be relatively strong, we have seen a decline in Malaysia in recent years. Where par business is written in a segregated fund, such as in India, Malaysia, and Singapore, shrinking par funds have specific challenges that actuaries need to manage, such as distributing estate assets and avoiding tontine effects.

This session will start by looking at the recent trends in par business sales volumes and fund sizes in Singapore and Malaysia. It will then go on to look at real-world case studies of some of the different approaches companies in the UK have used as part of managing the run-off of their par funds. The session will be of interest to life insurance actuaries in markets with participating business.

Speakers: John Jenkins, Milliman UK and Hana Ghazali, Milliman Malaysia

Workshop D3: Valuations of takaful operators post-IFRS17

This session will explore:

• what will change with IFRS17 for takaful operators?
• embedded value of takaful operators?
• value of takaful operators vs insurers.

Speaker: Harun Kannan Rajagopal, EY

Plenary 7: Market’s view on the impact of IFRS17 post-implementation

Since 1 January 2023 insurers have implemented and published IFRS 17 results. IFRS 17 has limited impact on overall financial strength, capital management and dividend capacity of insurers, but impacts on equity and profit going forward could be significant.

The discussion will cover the following areas:

• additional disclosures under IFRS17 and how insurance KPIs are viewed by external parties
• how companies manage their business post-IFRS17 (including product strategy)
• what CFOs should watch out for from an audit and IFRS17 reporting perspective
• what is the impact of IFRS17 on valuation of insurance companies in Asia (compared to traditional embedded value reporting)

Moderator: Tan Kian Wee, HSBC Hong Kong

Panellists:

• Clement Bonnet, Milliman Hong Kong
• Kailesh Mistry, HSBC
• Frank Yuen, Moodys
• Harun Kannan Rajagopal, EY

Professional skills 2: Implementing DEI – getting it right

Diversity, equity, and inclusion (DEI) is increasingly being held as a crucial pillar in many organisations. From cultivating a culture where all employees can bring their best selves to work, to implementing initiatives that support all employees.

DEI in organisations provides for a win-win situation: individuals gain through being able to fulfil their potential in a safe environment while the organisation gets to attract and retain the best and brightest talents from all backgrounds.

Join our panellists as they discuss the adoption and implementation of DEI and some of the best practices taken up by organisations.

Moderator: Aiza Benyamin, Senior Partner – Actuarial Partners Consulting, President Actuarial Society of Malaysia

Panellists:

• Dato’ Ami Moris, Chair 30% Club Malaysia
• Kartina Tahir Thomson, Senior Director WTW (UK), Institute and Faculty of Actuaries (IFoA) President-Elect