In order to increase our capacity and expertise to underwrite such risks, greater collaboration in the form of technical assistance and information sharing are important. Great value can be derived from the pooling of experiences and resources to develop our own probability models which will enable us to better price risks based on the unique characteristics of our region. Through such collaboration, the ability for the insurance industries in ASEAN to underwrite and reinsure risks to serve the needs of the ASEAN businesses and individuals can be significantly enhanced. In this regard, I would like to encourage the industry to work together with the regulators to explore ideas to build our capabilities and capacities as well as enhance our competitiveness towards developing a robust insurance industry in the region. To further support the development of ASEAN's insurance industry, initiatives to harmonise standards across countries should continue to remain as an important agenda. Exchange  4  BIS Review 134/2007  of information on insurance development and statistics among regulators would enable members to benchmark on their current progress and leverage on each others' experiences to advance forward. A more systematic and structured information sharing mechanism though a regional centre can serve as a catalyst for the development of insurance and reinsurance business among ASEAN members. The mechanism could form a core infrastructure for the region to build on its insurance data, enable trend analysis and support product pricing that better reflects the region claims experience and pricing environment.

The changing priorities and lifestyles of this new generation, growing wealth and increasing proportion of middle income population will also support continued and further growth in demand for investment-linked and wealth management products. As a result, the insurance industry has, and will continue to, expand its role beyond merely providing protection products. Against this backdrop, prospects for increasing the insurance penetration rate in our economies are clearly positive. However, this will hinge on the ability of the industry to respond to these changing demographics and dynamics in the financial system. In 2006, the insurance premiums averaged 2.95% of GDP in South East Asia as compared with 8.8% in the U.S. or 16.5% in the U.K. Compared to the  BIS Review 134/2007  1  banking sector, the insurance industry remains relatively less developed and commands a significantly smaller percentage of the total financial assets of the region's financial system. To tap these opportunities, appropriate strategies, new thinking and approaches will be required. In this regard, a significant development has been the evolution of alternative distribution mechanisms for insurance products and services in the region, notably through bancassurance. Indeed, bancassurance has developed in a number of ASEAN markets into a viable alternative distribution approach to the traditional agency force. Perhaps, in those markets where the insurance distribution channels through agency force have yet to be firmly established, bancassurance could provide a quantum leap to allow insurers to rapidly widen their outreach by tapping into an established banking network and client base.