We talk to Miller's Head of Asia about the Asian insurance landscape, the types of insurance he sees as being popular, how Miller helps its clients grow and market conditions heading into 2018 and beyond.
Michael Papworth is Head of Asia and also Head of Property and Casualty, a division within the Specialty business unit at Miller, which handles large industrial wholesale accounts as well as global cedant facultative business. Michael joined Miller in 2009 and has 30 years of insurance and reinsurance experience spanning energy, power, mining and heavy industry. Michael is also a member of The Insurance Institute of London and Chairman of the Miller Charities Committee.
What does your role at Miller entail?
My main role is to deliver the Singapore and Property and Casualty business plans and, in my Miller Group Executive role, help deliver the Group Business Plan. On a day-to-day basis this means managing a team of over 100 employees across five offices in London, Paris, Brussels, Tokyo and, of course, Singapore.
What changes have you noticed in the Asian insurance landscape during your time at Miller?
I joined Miller nearly nine years ago and, in that time, I have seen the Asia insurance landscape, in its widest sense, grow from strength to strength. All of the Asian economies have grown significantly and this, of course, has a direct growth effect on insurance. Additionally, all of our clients have become more sophisticated in the way they buy insurance and reinsurance, particularly in terms of how they measure both physical risks (i.e. typhoon and earthquake) as well as capital risk. In both these cases, we now have sophisticated exposure and actuarial models that help us assess risk.
What types of insurance do you see being popular in the coming years in the region?
Industrial and commercial insurance is already significantly advanced in Asia, but I still see this developing as more sophisticated risk management techniques evolve, especially the use of captives. Alongside this, as the economies grow, I would expect to see rapid growth in personal lines insurance such as motor, homeowner, life and health.
Finally, I would never be forgiven if I do not mention cyber insurance growth. This is a huge topic and the underlying risk is evolving extremely rapidly. Our challenge is to both keep up with technological change and develop insurance products that are fit for purpose. We have a long and interesting way to go in this field.
What are Miller’s growth plans in the region?
Miller, as always, remains fully committed to Asia with a clear focus on our specialist lines of business. We will continue to provide insurance and reinsurance solutions for complex risks and very much hope to grow together with our long-standing and loyal client base.
What role can Miller play in helping our clients grow their business?
Risk evaluation has become increasingly complex in our interconnected global market. It is our job to help our clients understand this risk and help them mitigate against it using the most sophisticated tools available, in the most cost effective manner. We can provide access to insurance and reinsurance products that provide long-term stability and certainty to our clients. This can only help them grow.
How do we differ from our competition?
Miller is not a supermarket trying to provide one-stop solutions to everything. We are a specialist broker in specific chosen sectors and we believe we do this better than anyone else. It is our belief that brokers that offer one-stop solutions to all lines of business become ‘jack-of-all-trades and master of none’.
How critical is the insurance protection gap and what role do brokers play in combating underinsurance?
This is a huge topic and would fill a separate article in its own right. To give you an example, in the immediate aftermath of Hurricane Harvey, President Trump visited Houston and the authorities announced that there had sadly been 38 deaths. This news and the President’s visit was widely reported globally. At exactly the same time, a Typhoon was hitting Bangladesh and Myanmar causing havoc and well over 1,000 deaths. This event was both uninsured and unreported.
Our industry, including (re)insurance companies and brokers, have a duty to help. We must ensure we provide insurance products to help these often very weak economies get back on their feet following natural catastrophes.
What does the landscape for the global insurance market look-like and how will it affect Asia and Asian business?
With the January treaty renewals now behind us, we know that the cost of reinsurance has, in general terms, gone up, but it was nothing like the amount being ‘talked up’ by certain markets, especially London. What this does mean, in practical terms, is that from an insurance and facultative reinsurance perspective we are, in most cases, no longer seeing premium and/or rate reductions.
We are therefore definitely not in a hard market but we are in a changing market. Whilst hurricanes Harvey, Irma and Maria and the Mexico earthquakes had a significant effect on third and fourth quarter earnings, the underlying capital base supporting the reinsurance industry was not affected. The impact of this, therefore, was limited to a full underwriting review for catastrophe-exposed accounts, with rate increases being normal on any loss-affected business. However, on technically good business with no losses, risk adjusted flat, and even some reductions, were seen on well-managed accounts.
Conversely, for accounts deemed to be technically under-rated, underwriting discipline has returned to the market and, for the first time in many years, we are seeing the market either seeking additional premium or turning down risks for which they have no appetite.
This is a fundamental shift and the key message from Miller to all our clients in Asia is to ensure they are well prepared with good information, well in advance of all their renewals in 2018.
We anticipate a very different market to that of 2016 and 2017.(Re)insurers are likely to take a more aggressive approach to loss affected or catastrophe exposed risks, as well as risks that lack in adequate risk controls. They are also likely to see (re)insurers increase their focus on retentions, limits and cover as they seek to reduce exposures.
With this in mind, buyers should prepare themselves for a different kind of engagement with the (re)insurance market in the near future. As always, Miller will remain as your trusted partner to help you manage this period of change.