Global Insurance News

1. South Korea: Govt To Launch Deregulation Plan In 1H06
The South Korean government will unveil a set of reforms for the domestic insurance sector during the first half of this year and plans to pass them by the end of the year, said the Finance Ministry.

Finance Minister Han Duck-Soo announced at a financial forum in Seoul that many of the “complicated” regulations in the sector would be eliminated in order to rejuvenate the industry. Comprehensive deregulation for insurers would encourage them to diversify and the state would also encourage companies to sell longer-term financial products and services, he added.

The crux of the deregulatory measures is expected to be the breakdown of walls separating life and non-life insurers. At a separate briefing, Deputy Finance Minister Kim Seok-dong maintained however that deregulation was unlikely to trigger overheated competition because the basic regulatory framework would remain.

South Korea’s government has been pursuing deregulation in a bid to expand the nation’s financial markets and raise the country’s competitiveness as a regional financial hub. In November, the ministry unveiled a large-scale deregulation plan for the financial sector which allowed conglomerate-affiliated insurers with sound financial status to offer trust services.

2. Singapore: Rules For New Pension Funds Tightened
The Central Provident Fund (CPF) board has laid down more stringent admission criteria for new mutual funds that want to access the city-state's US$71 billion retirement savings market.

Funds that want to be admitted into the CPF Investment Scheme (CPFIS) must be among the top 25% of their global peer group, higher than the existing benchmark of the top 50 percentile, the nation’s pension administrator said. It would also require an expense ratio that is lower than the median charges of existing CPFIS funds in its risk category.

New funds into the CPFIS should preferably have a track record of good performance for at least years. The Board will also step up its education efforts and provide more information on the performance and cost of funds within the CPFIS.

The new criteria, which comes into effect from 1 February, will not affect existing funds, the CPF board said. Some 400 mutual funds already have access to Singapore's retirement savings.

3. Malaysia: Proposed Standards On Insurance Contracts Released
The Malaysian Accounting Standards Board (MASB) has released the exposure drafts or proposed standards on insurance contracts for comments by interested parties.

The exposure draft on insurance contracts, or ED 51 Insurance Contracts is identical with IFRS 4 Insurance Contracts issued by the International Accounting Standards Board (IASB) in March 2004, said MASB Executive Director Dr Nordin Mohd. This is the first step in IASB's effort to achieve convergence of the widely varying accounting practices in the insurance industry around the world.

Among the main features of the proposed Malaysian standard on insurance contracts were that it applies to all insurance contracts including reinsurance contracts that an entity issues, and to reinsurance contracts that it holds.

4. Vietnam: BaoViet Revenue Up But Falls Short of Targets
State insurer BaoViet said that its 2005 revenue rose 8.5% to 6.1 trillion dong (US$384 million) although its life and non-life businesses had failed to meet the year’s targets.

Premium revenue for BaoViet Vietnam, the non-life arm of BaoViet rose 11% to 2.4 trillion dong, slightly lower than expected. The company’s market share in the non-life segment fell two percentage points to 38% from the previous year. Premium revenue for BaoViet Life grew a mere 0.4% to VND3 trillion (US$192 million), 95% of its annual target. BaoViet Life’s market share remained around 40% in 2005.

Pre-tax profit for the non-life business rose 5% to around 200 billion dong while BaoViet Life posted a pre-tax profit of 43.8 billion dong, growing 17.5%.