Insurers facing inflation risk

A recent study conducted by AM Best has focused on the impact of political, economic, and financial risks on the countries of the ASEAN region, particularly in Indonesia, Malaysia, Thailand, Philippines and Vietnam.

On the economic front, the international agency notes that the good performance made thanks to urbanization, industrialization, middle class growth, and the intensification of trade in the area have had a positive impact on the insurance industry.

However, AM Best warns authorities against falling GDP in 2013 and lower estimates of future growth. This negative outlook is likely to encourage insurers to focus on premium volumes and thereby increase competition on prices. Combined with the risk of inflation which prevails over the region, the impact of this approach is poised to be particularly harmful on results.