This needs to be reinforced by substantive improvements in risk management practices, greater alignment between business strategy and risk, and greater appreciation by boards and senior management of insurers on risk issues given the growing complexity and increasing interconnectedness of financial markets and financial sector players. The insurance industry has progressed significantly over the years and is well-positioned to supporting both the recovery process and future growth potential of the economy. As emerging economies rebalance with greater emphasis on private consumption, the social safety net will need to be strengthened, with insurance and pensions now having a greater role. An ageing population will also become an issue in the future. Globally, the number of the aged population that is aged 65 and above is expected to grow dramatically by 2050. Such rapid growth will have major economic and social consequences in many countries. Many nations are finding it increasingly difficult to provide adequately for this segment of the population through state-provided social security. Planning for retirement has therefore become essential both for individuals as well as public policy to ensure sustainable financing to meet retirement and healthcare needs in the long term. An enhanced social safety net would foster greater security in addition to reducing the need for significant precautionary savings. This would in turn promote increased consumption spending. Prospects for higher insurance penetration rate in the region continue to remain positive.
While several of the advanced economies will continue to be weighed down by weak growth as the slow process of financial resolution continues and the high unemployment delays the recovery process, emerging economies, in general, and Asia in particular, have shown a high degree of resilience. The financial intermediation in most emerging economies have remained undisrupted and have continued to support the domestic economic activity. While the emerging economies are expected to lead the recovery process, there needs to be a reassessment of the strategies for future growth. Over reliance on export orientation to the traditional markets would increase the vulnerability to external developments. Going forward, emerging economies now need to achieve a greater balance between external-oriented development strategies and the strengthening of our domestic demand. In Asia, domestic demand in most emerging economies are well supported by the positive demographic structure, the rising income levels, and the broadening of affluence. This is reinforced by the low levels of unemployment and inflation, and the continued access to financing. This changing spending patterns in Asia have already led to the rise of a modern retail sector across our region. In addition, high savings rates exceeding 30% of Gross National Product for most countries in Asia, raises the potential for long-term sustainability of domestic consumption spending. This trend has also supported increased intra-regional trade, investment and tourism that is reinforcing the growth prospects in the region. The evolving trends and encouraging growth prospects in our respective regions present tremendous opportunities for the insurance and reinsurance industry.