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Finaccord's report titled Commercial Non-Life Insurance Brokers in South-East Asia, plus the BrokerBASE™ and market data annexe that accompany it, investigate the importance of brokers in the distribution of non-life insurance for business and public sector clients in six countries in South-East Asia, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Brokers are the most important single distribution channel in this sector, and Finaccord’s research indicates that fees and commissions earned by brokers from commercial non-life insurance in these six countries were worth just over USD 700 million in 2014. Moreover, brokers are increasing their share of this market in most countries, often at the expense of tied agents, and are generally expected to continue growing their share in future.

This report first provides unique data for the size, segmentation and growth of the commercial non-life insurance market itself in each of the six countries in scope. It then quantifies the share of this market that is intermediated by brokers and ranks the leading brokers in each country according to their revenues from commercial non-life insurance in 2014, excluding income from other activities. This analysis is based on an investigation covering all significant insurance brokers in the region.

Table Of Contents

Commercial Non-Life Insurance Brokers in South-East Asia
00 EXECUTIVE SUMMARY 1
The region's commercial non-life insurance market was worth over USD 9 billion in premiums in 2014 2
and its value increased in real terms in five of the six countries between 2010 and 2014 3
Brokers are the most important single distribution channel for commercial lines in the region 3
Thailand is the region's largest commercial lines broking market by value 5
Across the six countries combined, Aon holds a clear lead over Marsh by market share 5
In real terms, Indonesia's commercial lines broking market will expand the most rapidly 6
10 INTRODUCTION 8
What is this report about? 8
The focus is uniquely on commercial non-life insurance, excluding other types of business 8
and on brokerage, even where intermediaries can act as both agents and brokers 8
Rationale 8
Methodology 9
Research program 9
Market data analysis 9
Definitions 9
Premiums 9
Abbreviations 9
BrokerBASE 10
Finaccord 10
20 REGIONAL OVERVIEW 12
Regulatory information 12
Liberalisation of ASEAN financial services markets should be beneficial to insurance brokers… 12
… expanding opportunities for commercial risks to be underwritten effectively 12
Commercial non-life insurance market 13
The value of commercial lines premiums in the region have risen consistently in recent years… 13
… especially in Indonesia and Thailand… 13
… although the Vietnamese market may have contracted slightly in real terms 14
Thailand and Malaysia account for nearly a half of commercial lines premiums in South-East Asia… 15
… with commercial motor the largest segment, comfortably ahead of commercial property and MAT… 17
… albeit with commercial liability cover and other commercial lines displaying the most rapid growth 17
Commercial non-life insurance brokers 19
Brokers' share of commercial non-life insurance distribution 19
At the regional level, the weighted distribution share of brokers in commercial lines is just under two thirds… 19
and it increased in all six countries between 2010 and 2014 19
Brokers are most important as distributors of commercial non-life insurance in Singapore and Thailand 19
Brokers' revenues from commercial non-life insurance distribution 21
The region's commercial lines broking market is worth just over USD 700 million… 21
… with Indonesia's market having expanded at an especially impressive rate, even in real terms 22
Market concentration and the top five brokers in Europe 24
Thailand's commercial lines broking market is the most fragmented and that of Vietnam the least so 24
Aon and Marsh hold a combined market share of more than 25% across all six markets 26
Willis drops back in the regional ranking due to its lack of a direct retail presence in two countries 26
The leading commercial lines broker is either Aon or Marsh in all six countries 27
International broker networks 28
Several international broker networks lack representation in South-East Asia 28
Future outlook 30
The future direction of commercial lines broking revenues is dependent on a number of factors… 30
… which point to the Indonesian market as the one that will continue generating the most real growth 30
The commercial lines broking market will carry on expanding, but at a slower rate than in previous years 32
30 INDONESIA 35
Introduction 35
Regulatory information 35
There are over 150 licensed insurance brokerages in Indonesia 35
Regulations that place a cap on foreign ownership of brokers may change in future 35
Commercial non-life insurance market 36
Indonesia's commercial lines market is expanding rapidly… 36
… with growth apparent across all of the main segments 36
Commercial non-life insurance brokers 39
Overview of brokers' presence in the distribution of commercial non-life insurance 39
Brokers are increasing their distribution share in commercial lines to the detriment of agents 39
Competitor trends and specialisms 40
The commercial lines broking market is characterised by a relatively high degree of fragmentation 40
KBRU is the country's largest indigenous commercial non-life insurance broker… 40
… although there are five others in the top ten 41
Among the top 20, IBS Group secures the highest proportion of total revenues from commercial lines 42
Brokers' distribution strategies 43
MIR Brokers (Mitra Iswara and Rorimpandey) is especially strong in the construction sector 43
Future outlook 45
Indonesian brokers are optimistic that the commercial lines broking market will carry on expanding… 45
… causing its value to rise above USD 200 million by 2018 45
40 MALAYSIA 47
Introduction 47
Regulatory information 47
Insurance intermediaries are regulated by the Bank Negara Malaysia (BNM) 47
Changes in ownership of brokers require the prior written approval of the BNM 48
Commercial non-life insurance market 49
Around 40% of the commercial lines insurance market is composed of commercial motor insurance… 49
… with MAT the next largest segment… 49
although premiums for commercial liability insurance have been growing most rapidly 50
Commercial non-life insurance brokers 51
Overview of brokers' presence in the distribution of commercial non-life insurance 51
In commercial lines, the distribution share of brokers is not far behind that of agents 51
Competitor trends and specialisms 52
The top ten brokers account for around 70% of the commercial lines broking market in Malaysia… 52
… with Aon, JLT and Marsh all having been active in the country for several decades 52
JLT boosted its presence by purchasing Insfield Insurance Brokers in 2013 53
Tradewinds International Insurance Brokers is the largest indigenous broker in Malaysia 53
Both Lockton and Willis operate through brokerages in which they have partial ownership stakes 53
Howden Broking Group acquired a stake in CIMB Insurance Brokers in January 2015 54
Commercial non-life insurance is the most important source of revenue for all of the top 20 brokers… 55
… with one generating upwards of 95% of its total revenues from this activity 55
Brokers' distribution strategies 56
A handful of the top 20 brokers have product or client sector specialisations… 56
… and five belong to international broker networks 57
Future outlook 57
Compound annual growth of 33% in real terms is predicted for the Malaysian commercial lines market 57
50 PHILIPPINES 59
Introduction 59
Regulatory information 59
The Insurance Commission distinguishes between insurance agents and insurance brokers 59
There are around 60 brokerages active in non-life insurance in the Philippines 60
Commercial non-life insurance market 60
The commercial lines market of the Philippines grew quite rapidly between 2010 and 2014… 60
with commercial property insurance outperforming other segments in this respect 61
Commercial non-life insurance brokers 62
Overview of brokers' presence in the distribution of commercial non-life insurance 62
Brokers have consolidated their position as the main distribution channel for commercial lines 62
Competitor trends and specialisms 64
The commercial lines broking market is characterised by a fairly high degree of fragmentation… 64
… with the top competitor restricted to a share of commercial lines broking revenues of less than 10% 64
Non-indigenous brokers in the top 15 include Aon, Howden, JLT, Lockton and Marsh 65
For primary insurance, Willis operates through a correspondent broker 65
Among the top 15, Trinity obtains the highest proportion of total revenues from commercial lines broking… 66
… and BDO Insurance Brokers the least due to its primary focus on personal lines 66
Brokers' distribution strategies 67
Intertrade is particularly strong in the motor insurance segment 67
Five international broker networks have members in the Philippines 67
Future outlook 68
Commercial lines broking revenues are predicted to continue growing at a healthy rate 68
Brokers may benefit from advancing integration of financial services markets in the ASEAN region 68
60 SINGAPORE 70
Introduction 70
Regulatory information 70
The minimum share capital requirement for setting up a brokerage depends on the type of activity 70
There are no restrictions on the foreign ownership of insurance brokerages in Singapore 71
Commercial non-life insurance market 71
Commercial liability insurance is the largest segment within the Singaporean commercial lines market… 71
and is also the most rapidly growing 71
Commercial non-life insurance brokers 74
Overview of brokers' presence in the distribution of commercial non-life insurance 74
Brokers have consolidated their position as the dominant distribution channel for commercial lines 74
Competitor trends and specialisms 75
The commercial lines broking market is characterised by a fairly high degree of concentration… 75
… with the top three firms controlling more than 60% of commercial lines broking revenues 75
LCH is the largest indigenous brokerage in Singapore's commercial lines broking market 75
Honan Insurance Group has bolstered its position by acquiring MACS Insurance Brokers 76
Among the top 15, Texel Asia obtains the highest proportion of total revenues from commercial lines… 77
… and Pan Resources the least due to its primary focus on employee benefits 77
Brokers' distribution strategies 78
LCH is particularly strong as a provider of marine insurance to shipping industry clients 78
Four of the top 15 commercial non-life brokers are members of international networks 78
Future outlook 79
The value of Singapore's commercial lines broking market will edge up further between 2014 and 2018 79
70 THAILAND 82
Introduction 82
Regulatory information 82
There are close to 500 registered brokers active in non-life insurance in Thailand… 82
… including individuals as well as corporate entities… 82
… although changes to the law may alter this picture in future 82
Commercial non-life insurance market 83
The Thai commercial lines market was worth just under USD 25 billion in premiums in 2014… 83
… with commercial motor insurance the largest segment within this total 84
Commercial non-life insurance brokers 85
Overview of brokers' presence in the distribution of commercial non-life insurance 85
Brokers represent the main distribution channel for commercial lines in Thailand 85
Competitor trends and specialisms 87
The commercial lines broking sector is comparatively fragmented… 87
… with the top ten brokerages limited to a combined share of less than 40% of the market 87
The leading six competitors are all owned entirely or in part by foreign investors… 87
… with IMG Broker the largest wholly indigenous firm 87
Commercial lines generate a majority of revenues for 17 of the top 20 brokerages in Thailand… 89
… albeit two are heavily oriented to personal lines 89
Brokers' distribution strategies 90
The leading commercial lines brokers in Thailand are typically generalists 90
Most firms belonging to international broker networks are from outside of the top 20 90
Future outlook 91
The distribution share of brokers in commercial lines is expected to have nudged up further by 2018 91
80 VIETNAM 94
Introduction 94
Regulatory information 94
Vietnamese law recognises the difference between insurance brokers and insurance agents 94
It is officially the case that broking commissions should not exceed 15% of premiums 94
For local clients with no foreign investors, insurance cover must be sourced locally 95
Commercial non-life insurance market 95
In nominal terms, the Vietnamese commercial lines insurance market has been growing quite rapidly… 95
with the small market for commercial liability insurance having been particularly buoyant in this respect 96
Commercial non-life insurance brokers 98
Overview of brokers' presence in the distribution of commercial non-life insurance 98
Brokers have been pushing up their distribution share in commercial non-life insurance… 98
although the value of the commercial lines broking market remains comparatively small 98
Competitor trends and specialisms 99
The commercial lines broking market is characterised by a high degree of concentration… 99
… as a consequence of the fact that there are only 12 authorised firms in this field 99
Toyota Tsusho Insurance Broker was established as a joint venture in 2011 100
Commercial non-life insurance is by far the most important revenue stream for most brokers 101
Brokers' distribution strategies 102
Two brokers specialise mainly in MAT insurance for clients in the shipping and aviation sectors 102
In several cases, broker network members in Vietnam have not yet been authorised 102
Future outlook 104
Commercial lines broking revenues in Vietnam will carry on growing in both nominal and real terms 104

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