Singapore Financials

Sompo eyes spot among Asia’s top 5 foreign insurers outside Japan

23, Aug. 2019

By Miyuki Shimizu

SINGAPORE, NNA - Major Japanese nonlife insurance provider Sompo Holdings, Inc. is seeking to join the top five foreign nonlife insurance companies in Asia, excluding Japan, in the future by cultivating demand among non-Japanese companies as well, according to Daniel Neo, regional CEO of Singapore-based Sompo Holdings (Asia) Pte. Ltd.

“We intend to maintain double-digit business growth while focusing on nonlife insurance,” Neo said in an interview with NNA. “We are ranked eighth among foreign nonlife insurance companies in Asia outside Japan currently. We aim to join the top five in the industry in the future.”

In fact, Sompo’s insurance premium revenue has grown by double digits annually over the past five years, almost doubling to US$1.2 billion, but the company’s name recognition is still low in Asia even though it is well known in Japan.

“However, our business scale has been expanding in recent years, and the number of our policyholders in Southeast Asia is now in excess of one million,” Neo said. In Indonesia, Malaysia and Singapore, the three major markets in the Association of Southeast Asian Nations (ASEAN) region, the company ranks among the top 10 in the nonlife insurance market of each country.

In Indonesia, Sompo’s sales record in the auto insurance segment was almost nil initially and, at first, “we sought to increase our visibility by holding regular press conferences to announce financial results and so on while issuing press releases related to our products and services,” he said.

“As our brand power gradually improved, our auto insurance revenue in Indonesia increased by 50 percent annually over the last four years. Local companies occupy the top nine spots in the local nonlife insurance market, but we are the top foreign company, ranked 10th. I hope to share our record of success in Indonesia with other countries.”

In Indonesia, the ratio of Japanese companies to Sompo’s total customers was about 65 percent four years ago, but this has almost halved to about 35 percent at present, Noe said. “This does not mean that the number of Japanese customers is decreasing, but rather the number of local companies is increasing.”

In an effort to acquire more customers, Sompo is now focusing on telematics insurance (auto insurance that measures driving characteristics using communication devices to reflect them in insurance premiums) and bancassurance (insurance policy sales through banks). “In Indonesia, where auto insurance sales are brisk, we are already offering an app for telematics insurance. As for bancassurance, we partnered with a major Malaysian bank, the CIMB Group, in 2016 for sales in four ASEAN countries (Indonesia, Malaysia, Singapore and Thailand),” Neo said.

Indonesia has a large population and car sales are on the rise, providing auto insurance with a great potential for growth, he said. “However, the government determines how to calculate premium rates for auto insurance, making it difficult for us to differentiate ourselves from other companies by varying premium rates. Instead, we differentiate ourselves from our competitors by the high quality of our rapid and courteous service.”

Singapore is a smaller market, but the presence of many insurance companies keeps competition fierce because premium rates can be set flexibly, Neo said. In Malaysia, new car sales have been sluggish over the past few years, and the sense of uncertainty is increasing among consumers following the overhaul of the country’s sales tax scheme, he said. “In both countries, it is important to create a system capable of ensuring profit without being caught up in the competition to reduce premiums.”

Myanmar is a promising country, among other markets, according to Neo. Sompo boasts a long history there, opening its Yangon office in 1942 and later stationing the first permanent staff as a foreign insurance company, he said. In May this year, several Japanese companies, including Sompo, obtained approval for local joint ventures, Neo noted. “Further relaxation of foreign capital regulations is expected in the future, and we are hoping to lead it to business expansion on a national scale.”

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