Participating (par) business has been a significant part of the product landscape of the life insurance industry in Asia Pacific for many years, but in many markets the recent low interest rate conditions have been a source of concern for par product providers. Enhanced regulation and governance requirements have also created challenges for par business in the region. With this in mind, Milliman has carried out a review of par business in selected Asian markets (China, Hong Kong, India, and Singapore) to better understand the current issues facing life insurers writing this type of business.
The evidence is clear: Demand for par products is as strong as ever, but providers may need to adapt and think more critically about how they manage this business to cope with the changing economic and regulatory environment.
This research report also provides a historical review of how par business evolved in the U.K., and discusses the concept of unitized with-profits (UWP), which has had limited use in Asia so far.