SINGAPORE'S insurance market has grown steadily over the last decade, and insurers can expect even more gains once the Asean Economic Community (AEC) comes into existence at the end of the year.
"Whatever happens in the AEC, however quickly it happens, insurance companies are starting to think about how they can expand beyond their national boundaries," said Dr Roger Sellek, chief executive of international credit-rating agency AM Best Asia Pacific at a media briefing yesterday.
Stoking this growth is the fact that some insurers are carrying a lot of capital either voluntarily, or in compliance with regulators' risk-based capital regimes, Dr Sellek added.
AM Best specialises in rating insurance and reinsurance companies, and yesterday opened its first South-east Asian headquarters in Singapore.
With the AEC on the agenda, an international credit rating is the "passport into adjacent markets" for the 110 insurers and reinsurers based in Singapore, said Dr Sellek.
He also anticipates "ample potential" in neighbouring nations such as Indonesia, where as few as 2 per cent of insurers have an international rating.
Dr Sellek will head the firm's Singapore office from June, and hopes to reach a staff strength of 15 over the next three years.
Mr Moung Mo Lee, general manager of analytics at AM Best Asia Pacific, was also upbeat. "The personal insurance market is going to explode in Thailand, and a couple of years later, it's going to explode in Indonesia," he said.
Singapore has the largest insurance market in South-east Asia - life and non-life premium volumes here topped $31 billion in 2013.
But Mr Lee estimates that the Republic has about a decade or so to build up its competitiveness "before the real game starts".
Insurers have already been making moves. Last week, life insurer Manulife paid US$1.2 billion (S$1.64 billion) to local bank DBS for a 15-year exclusive deal to sell insurance products to the bank's client base, which extends to Hong Kong, China and Indonesia.
Last year, Prudential renewed a similar agreement with Standard Chartered bank in nine Asian markets for US$1.25 billion. In 2013, AIA struck a US$800 million 15-year deal with Citibank in 11 Asian markets.
Mr Lee expects another smaller wave, in which banks sell networks for non-life insurance.
"It's the right time. The valuations are very high, and for the buyers, they know the potential. They're not buying Singapore networks. They're buying the whole Asean network."