OBG talks to Helen Yeo, Chairperson, General Insurance Association of Brunei Darussalam

 Interview: Helen Yeo

How will bringing conventional insurance associations and takaful(Islamic insurance) groups under one roof create a more level playing field?

HELEN YEO: The process of registering the new association that includes general and life insurers, as well as general and life takaful operators, has been completed and is being considered by the authorities. Some amendments have to be made to the constitution and pending their ratification, we anticipate the registration to be complete sometime in 2013. Both conventional insurers and takaful operators have been cooperative and supportive of this process. With its introduction, the industry will be better regulated and more credible, and this will enhance the development of insurers.

To what extent are high payouts for worker compensation claims affecting insurance margins?

YEO: Motor third-party bodily injuries and worker compensation claims, particularly employer liability claims, are concerning to insurers in Brunei Darussalam. Compared to neighbouring countries, a claimant can receive high awards, as there is no limit on elements like the loss of future income. In certain countries, for instance, you can only claim for so many years and you must be employed at the time of the accident to claim a loss of future earnings. Also, you cannot claim for loss of future earnings if you are already 55 or over. High payouts affect insurers’ bottom payouts and would lead to insurers paying higher reinsurance premiums. We believe when the Workplace Safety and Health Order of 2009 is implemented, it will reduce accidents in work places, as failing to provide safe working conditions for employees becomes a criminal offence under the order.

To reduce road accidents, the Ministry of Communications last year launched a Road Safety Awareness Campaign. The General Insurance Association and takaful operators participated as co-partners. Several events were held to raise the awareness of road safety, including the Road Safety Debate, and the campaign culminated in the Walkabout for a Cause at Jerudong Park.

What is the current potential for growth within the life insurance sector in Brunei Darussalam, and what else can be done to increase penetration levels?

YEO: The potential for growth in life insurance is high, despite the low penetration rate. The challenge for insurers is to reach untapped market segments that hold the key to realising growth for the industry. It is our aim to raise awareness about insurance among members of the public. Clients need to understand why and what they are buying, and as such insurance intermediaries play an important role in the insuring process, as they are the link between insurance firms and consumers.

They are also the ones who offer advice, information and services in connection with the sales of insurance.

As such, they have to provide sufficient information to consumers so that their clients can make informed decisions about the purchase of insurance services.

Hence we must also be constantly upgrading the skills of our professionals and insurance agents through continuous training and development, as well as by introducing innovative products to meet the everchanging needs of consumers. Business models have changed over the years. We need to address how products, distribution, technology, compliance and regulatory changes will affect the industry moving forward.

We are constantly exploring best practices, introducing fresh ideas and offering strategies for overcoming the sector’s challenges, so that we can contribute to the stability and development of the industry.

Programmes must be introduced to change the mindset of the public on the importance of embracing a culture of savings and the benefits of insurance. A lot of social safety nets are already provided in Brunei Darussalam, which makes it challenging to grow the sector.

However, we expect that increased penetration will come once financial literacy is improved among the public through roadshows and financial planning workshops or seminars. The challenges we face each day are enormous, but with the right business models and right mindset, the chances for success are increased.