Tharman Shanmugaratnam: The evolving role of insurance in Singapore Speech by Mr Tharman Shanmugaratnam, Chairman of the Monetary Authority of Singapore, at the Launch of Prudential's New Office, Singapore, 7 November 2017. * * * Mr Mike Wells, Group CEO, Prudential PLC Mr Kai Nargolwala, Chairman, Prudential Corporation Asia Mr Nic Nicandrou, CEO, Prudential Corporation Asia Mr Wilf Blackburn, CEO, Prudential Assurance Company Singapore Ladies and Gentlemen 1. Thank you for inviting me to join you. Let me begin by congratulating Prudential on the opening of its new office at Marina One. 2. It is another milestone in Prudential’s long journey with Singapore, having started out as an agent for fire insurance in Singapore in 1924, and opening its first full branch in 1931. Its first life policy, issued to a Percy Robert Campbell, was a 15-year policy which would mature for the sum of $ Today, Prudential serves over 900,000 customers here, and the average maturity value of a Prudential life insurance policy in Singapore is just over $ 3. Prudential has indeed grown with Singapore. Its total sum assured in Singapore has grown to $ billion in 2016, and it currently employs over a thousand staff and works with more than 4500 financial consultants. Opportunity in Asia’s Demographic and Digital Transitions 4. Prudential, as with its counterparts in the life insurance industry, is increasingly focused on deepening its footprint in Asia. The opportunities are immense, and the basic reasons for this are well recognised. 5. Asia is experiencing momentous demographic change.
In the current liquid conditions, therefore, the large banks have been able to cut their standard savings rate. They are therefore seen by some analysts as the winners from deregulation since they now have another lever to adjust their net interest margin. The unanswered question is whether they will be able to get away without a significant erosion of deposits in savings and current accounts. A certain amount of switching of accounts has gone on. But there is not enough evidence at this stage to conclude whether deregulation has resulted in any significant redistribution of deposits among banks. So we cannot tell how interest elastic the demand for savings accounts may prove to be, particularly in today's somewhat artificial conditions of high liquidity. However, what can be said is that deregulation does offer the smaller banks an enhanced ability to compete for savings accounts and for those customers which the large banks may be less eager to retain. While the smaller banks may have to pay a higher rate for their savings deposits, they will still benefit if they can substitute such funds for even higher cost, and less stable, time deposits. Consumers will also benefit from deregulation through greater choice of savings products and, for those with larger balances at least, from higher interest rates. However, we have to face the fact that not all depositors will be better off in the deregulated world.