While these trends are shaping the evolution of the East Asian insurance industry today, several other factors also need to be taken into account. First is the much faster pace at which these forces of change are taking place in East Asia. Second is the significantly more demanding regulatory environment in which insurers now operate. And third is the impact of climate change. This thus calls for a greater urgency in responding to these developments. Allow me to elaborate on these factors given their potential to have an important bearing on the industry’s focus and priorities in navigating its future growth path in the region. On the first point, the growth trajectory for the demand for insurance products and services in East Asia over the medium term will be much higher than the path that history implies. The global volume of cross-border trade has almost tripled since 2000. In addition, intra-regional trade within Asia is projected to account for an increasingly larger share of this expanding world trade. Further liberalisation and greater regional economic and financial integration in Asia will reinforce this trend. This presents substantial opportunities for East Asian insurers to support the growing trade activities. After decades of strong growth, the Asian region is also now the home to a middle income population of 500 million. This number is projected to increase by more than six-fold to 3 billion by 2030. The OECD also projects that by 2020, Asian consumers will account for 40 percent of global consumption.

The recent floods in Thailand in 2011, was one of the costliest catastrophes in history. As insurance penetration rises across Asia, property insurers will face greater concentration of exposures to natural disasters. Life insurers will also be impacted in other ways, including higher incidences of diseases while also experiencing pressures on long term returns on investment. The insurance industry therefore needs to be able to manage such exposures as well as act as a catalyst for societies to adapt to such climate change. Risk management systems in particular, needs to be able to capture and aggregate exposures to such event risks in a timely manner. Also important is to incentivise efficient energy use through innovative product design and pricing. In addition, the industry needs to come together to seek out opportunities to partner with government and non-governmental organisations to facilitate improvements in urban planning, infrastructure design and building codes. BIS central bankers’ speeches  3  The integration of environmental and social considerations in insurers’ corporate strategies and operations will clearly become increasingly important to long-term sustainability. This must also include a sustained focus on financial inclusion to achieve balanced and equitable growth. Important is to ensure that all households continue to have meaningful access to financial products and services and that even for those that currently have financial access that they do not become financially excluded especially in an environment where financial products and services are becoming increasingly unaffordable or complex. It is estimated that up to 4 billion people worldwide require low-cost insurance protection.