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Insight's Article on How the Industry Can Speed Along the FTA Superhighway
Tuesday, 1 May 2007
Insight Press Release

Mr Nehemiah Neo, Managing Director, Insight Adjusters Group (Lloyd´s Agents Singapore and Malaysia), and Regional
Director for Asia, vrs Universe, looks at how the current enthusiasm for Free Trade Agreements (FTAs) in Singapore and the
Asean region in general is having a beneficial effect on the providers of insurance services such as loss adjusting.

Free Trade Agreements (FTAs) are superhighways that connect Singapore and the Asean region to major
economies and new markets. With FTAs, exporters, investors and service providers stand to enjoy a myriad of
benefits like tariff concessions, preferential access to certain sectors, faster entry into markets and intellectual
property (IP) protection.

As an integral part of the world´s trade architecture, a network of 13 FTAs positions Singapore as an integrated
manufacturing centre in Southeast Asia. It also promotes research and development in a knowledge-based
economy and drives the services hub.

Singapore has so far concluded 13 FTAs including those with the US, China and South Korea, and is actively
negotiating 10 more. In terms of economic output, Singapore´s 13 FTA partners together account for more than
46% of the world´s gross domestic product (GDP). They also represent most of Singapore´s major trading
partners, accounting for more than 30% of domestic exports.

The Insurance Link

The insurance sector has been specifically mentioned in virtually all these FTAs signed in recent years and this is
important as the industry is one of the most cross-border driven within the provision of financial services.
Because insurers and reinsurers operate in a truly global trading environment spurred by FTAs among other
factors, there is also a need for service providers such as loss adjusters to have unfettered cross-border access
to their insurer and reinsurer clients.

The past few years have seen this trend increase as the mega loss-adjusting houses have merged and grown to
the point where they have near immediate access to every major underwriting centre in the world.

The concept of FTAs, however, has also been responsible for encouraging a large number of smaller,
independent loss adjusters to think in a more broad-minded way than simply sticking to their domestic markets.

The idea of a regional Asia-based loss adjuster having a strong regional network and able to tap into much wider
international networks if needed was unheard of just two decades ago.

Now thanks to new technologies and ease of cross-border business transactions facilitated by FTAs, there are
many more opportunities for loss adjusters and other service providers to be close to their clients no matter
where they are or how complex their insurance programmes.

Global Mindsets

How does this impact the regional loss adjusters and their ability to service customers and their claims?
Many Singapore-based underwriters are now writing risks right across the region, from the Indian subcontinent to
the West, right down to Australia and the Far East markets.

More than ever, the concept of underwriting risk is becoming more global. But the response from the service
sector must therefore also be global. The idea of unhindered free trade undoubtedly encourages this concept and
particularly so in certain business classes.

Growth Areas

For example, Insight Loss Adjusters has recently been involved in handling several high-profile product liability
claims for Singapore-based companies with insurance written in the Republic but with exposures all over the
world.

In recent times we have worked on complex product liability claims arising from the product of one company
based in Singapore but with a global sales market. In one case we were handling product liability claims for the
same firm and underwriters on the same set of products in the US, China, Hong Kong and Indonesia.

The concept of being able to have open access to markets in which our principals operate is vital to the lossadjusting
community. In earlier times this was not always the case.
Insurance classes such as product liability – virtually a compulsory line of business for any manufacturer in Asia
which wishes to sell products in the US – will be a massive area of growth as FTAs take full effect on Asia in the
next few years.

Another area of insurance that is growing as a result of FTAs is cover in the transport and multimodal sectors of
air, land and sea. FTAs between Asian countries and also between Asia and other major trading powers like the
US have sparked an upsurge in liability claims arising from movement of plant and equipment, disputes over Bills
of Lading, and many other similar trade-related insurance disputes.
The whole movement of increased imports and exports will increase due to the FTA-inspired growth in trade and
this can lead to only more insurance being bought to mitigate the risks associated with trade. But it will also lead
to an increase in claims.

As this movement becomes ever more interlinked and complex, underwriters will come to rely increasingly on
loss adjusters which have the necessary skills and local knowledge and geographical reach to handle these
claims and be able to give them solid, accurate and independent claims advisories.

It will therefore be a busy time for both the insurance and reinsurance community and the adjusting profession as
the wheels of free trade spin ever faster in the Asia region.