A number of key participants at the 49th IIS Annual Seminar
Leadership Panel held on June 16-19 at Hyatt Hotel in Seoul.(Photo courtesy of KLIF)
The 49th International Insurance Society (IIS) Annual Seminar Leadership Panel, held for the first time in 26 years in Seoul, concluded its three-day session from June 16-19 at the Hyatt Hotel in Seoul with a serious discussion on major issues in the global insurance industry.
Gov. Choi Soo-hyun of the Financial Supervisory Service (FSS) said in his speech titled “For a Better Future for the Insurance Industry,” the protection of financial consumers, low global interest rates, changes in global insurance regulations, and an aging population are four global mega trends that should be taken as new opportunities for growth, not risks. Choi said the financial supervisory paradigm has changed to securing sustainable growth through protection of financial consumers. Financial supervisory entities should have clear attitudes on financial consumer protection to change the financial market so that trust in the market is secured.
The FSS head also said that in order to overcome the low interest rate situation around the world, the financial institutions should learn lessons from the failure of the low-interest rate countermeasures of the 1990s. Excessive investments in high-risk areas should be avoided and instead there must be a search for stable long-term investment areas. He also recommended the creation of an Asian bond market and an international debt market to fan investments in emerging markets. Choi also said the reduction in workforce is one of the causes for slow economic growth, and insurance firms should learn to take advantage of the situation and find new markets for the situation as a base. The situation also creates the need for expensive medical care due to the expanded life expectancy and increases in earnings, which would reduce public social care services as government budgets struggle to cover the expanding expenses.
Chairman Shin Chang-jae of Kyobo Life Insurance Co. said insurance firms should avoid competition over market share, but instead work on risk control.
He participated in the first session of the IIS leadership panel and said the life insurance business, a long-term business, won’t be able to cover its losses with profits from increased sales if risk management is not done right, which is a special characteristic of the industry. In Korea, competition for market share rages on as life insurance firms focus on operations. He also added that growth management and risk management should be balanced because they don’t conflict with each other.
Shin said Kyobo Life has been working to cut the weight of the reserve fund for interest rates, but the weight of the interest related fund requirement has been raised to 40 percent now from 20 percent in the mid 2000s. The interest rates on insurance products related to changes in interest rates and the minimum guaranteed interest rates for insurance policy reimbursement payment is being readjusted based on current interest rates, Shin said.
Chairman Robert Benmosche of AIG said RBC can be a warning for dangers ahead. The regulatory authorities played a big role in overcoming financial crises and the insurance industry learned a lot from past experiences. The AIG chairman also noted that global regulatory reform is needed.
Chairman Michael Morrissey of IIS said the Seoul IIS leadership panel had many participants who are insurance experts and CEOs and he was impressed by the well-organized management of the events and their detailed proceedings.
Chairman Kim Gyu-bok of the Korea Life Insurance Association said the IIS Seoul event has been a great occasion to learn the wisdom to overcome the insurance industry faced with a crisis due to low-interest rates.
Chairman Moon Jae-woo of the Korea Non-Life Insurance Association, said the IIS Seoul conference was an occasion to help to boost the international position of the Korean insurance industry so that the Korean insurance firms can jump up as global players in the world.
During the meeting, the Shin Research Excellence Awards were presented to Professors Nadine Gatzert and Alexander Bohnert of the Friedrich-Alexander University of Erlangen-Nurenberg, Germany, and Professor W. Jean Kwon of the School of Risk Management, Insurance, and Actuarial Science, St. John’s University in New York, the United States.
Chairmen Moon Jae-woo of the Korea Non-Life Insurance Association and Kim Kyu-bok of t
he Korea Life Insurance Association welcome the participants at a reception to tell the
opening of the IIS Annual Seminar Leadership Panel at Hyatt Hotel in Seoul June 16-19.