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Public-Private Insurance Partnerships Will Help During Bad Times, Says Zeti
KUALA LUMPUR, Oct 20 (Bernama) -- Public-private partnerships between the government and insurance players will be essential in providing suitable insurance schemes and developing risk mitigating mechanisms particularly when facing catastrophies, says Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.
With the increasing catastrophies that have been associated with global climate change and pandemics, such partnerships will be important when coping up with the resulting losses.
"According to a recent study, economic losses caused by natural and man-made catastrophies around the world in 2008 amounted to US$269 billion.
"Asia accounted for the top five worst catastrophies in terms of fatalities in 2008. The recent natural disasters in Southeast Asia and the Pacific Islands also resulted in major destructions," she said in her keynote address before officiating the 21st Federation of Afro-Asian Insurance and Reinsurance Conference 2009 here Tuesday.
Zeti said greater collaborative efforts among industry players in the region in the form of technical assistance and pooling of resources would increase capacity and expertise to underwrite such risks.
"Through such collaboration, the ability for the insurance industry to underwrite and reinsure risks based on the requirements of the region can be significantly enhanced," she added.
While several of the advanced economies would continue to be weighed down by weak growth as the slow process of financial resolution continues and the high unemployment delays the recovery process, emerging economies, in general, and Asia in particular, have shown a high degree of resilience, Zeti said.
"While the emerging economies are expected to lead the recovery process, there needs to be a reassessment of the strategies for future growth. Over reliance on export orientation to the traditional markets would increase the vulnerability to external developments," she added.
Going forward, emerging economies now need to achieve a greater balance between external-oriented development strategies and the strengthening of their domestic demand, said the central bank governor.
Zeti said the evolving trends and encouraging growth prospects in respective regions present tremendous opportunities for the insurance and reinsurance industry.
She said the overall aggregate financial position of insurers in the crisis affected countries have continued to be strong, and generally not severely affected by liquidity pressures or exposures in the credit derivatives markets.
Earlier losses by insurers in financial market activities had resulted in a shift to "back-to-basics" models, focusing on core underwriting business instead of heavily relying on investments as the main source of earnings.
The industry had also benefited from the subsequent upturn in the pricing cycle which has fortified the capital position of insurers and provided the support to maintaining sound underwriting standards.
Zeti said these conditions have placed the industry on a much stronger position to withstand the challenges from the current global financial turmoil.
She said prospects for higher insurance penetration rate in the region continued to remain positive.
In 2008, insurance premiums accounted for 5.95 per cent of gross domestic product (GDP) in Asia and 3.57 per cent of GDP in Africa compared to 7.29 per cent in America and 7.46 per cent in Europe.
She said the changing priorities of the growing population in the region, largely comprising a young workforce in the middle income group, have also enhanced the demand for investment-linked and wealth management products.
-- BERNAMA
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CLOSING, FRIDAY, NOV 20
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US |
3.3840/3870 |
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S'pore
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2.4348/4430 |
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100 Yen
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3.8065/8103 |
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Sterling
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5.6141/6204 |
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Euro |
5.0405/0460 |
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Source: Bank Negara
Malaysia |
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