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Japanese are 'checked and balanced' in the Far East.

Will the Japanese dominate the Far East economy and its insurance markets? If you're William Thomas, chairman of Alexander Stenhouse (Asia) Holdings Pte. Ltd., you'd say "No!"

Mr. Thomas, who is based in Singapore, warned Risk Management Forum participants not to underestimate the power of the ethnic Chinese populations who are scattered around Asia and who are likely to act as a "check and balance to Japanese economic expansion."

In Hong Kong, which is scheduled to rejoin China in 1997, neither the Japanese nor the mainland Chinese will be able to take total control. "I believe that the negative view expressed concerning the development of the Hong Kong economy has failed to take into consideration the importance of economic growth which the ethnic Chinese play within many countries in the region," Mr. Thomas said "We are noticing, for instance, substantial investments in Hong Kong being made by Indonesian companies run by ethnic Chinese." He added that the largest investor-owner on the mainland is a group of ethnic Chinese from Thailand.

Looking at the Asian insurance marketplace from a broader perspective, Mr. Thomas sees some opening up of the Japanese segment, which has traditionally been closed by regulation, cross-holding of company stock and a "buy-Japanese" mentality. "There has been talk recently that the insurance industry may be poised for its first shake-up in 50 years," he said. "Proposed changes include market deregulation through the establishment of a brokerage system, relaxation of the tariff system and abolition of the law restricting life and non-life insurance companies from marketing each other's products." However, few knowledgeable sources believe that significant change will result when the reforms are implemented, he said.

Throughout the rest of the Far East, markets remain soft as economic sluggishness and poor loss experience lead to disappointing results, raising questions of solvency. Consequently, legislators and regulators are considering either easing or increasing regulatory controls, Mr. Thomas said. "While there has been easing in various markets with promise of even more open access to countries such as Korea and Taiwan, in general, the market remains fairly well-controlled either by legislation, application of tariffs or sheer market practice," Mr. Thomas said.

In Singapore, where the market has been fairly open, the General Insurance Association froze property insurance rates, and other reforms are likely, as regulators emphasize the need for adequate security. Another traditionally open market, Indonesia, has seen recent increases in minimum capital requirements for insurers and brokers. In Malaysia, insurers were recently placed under the supervision of the central bank.--MLS
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Title Annotation:Risk Management Forum
Author:Schussel, Mark L.
Publication:Risk Management
Date:Dec 1, 1991
Previous Article:Insurance markets open beyond the Eastern front.
Next Article:Ugly truths about insurance dilemmas.

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