The year 2016 marks the first year of operation for the ASEAN Economic Community (AEC), while it is also an important milestone in the creation of another, even larger international trading group, the Trans-Pacific Partnership (TPP). The Sultanate has been a key supporter of both groupings, as well as a long-time member of another regional organisation, the Asia Pacific Economic Cooperation. This dense mesh of trading groups has implications for many areas of the economy in the Sultanate, with the insurance industry working in its response to the impact of an increasingly liberalised Asia Pacific.

One Market

With insurance premiums in ASEAN forecast to have reached $87bn in 2015 – twice the level of 2009 – the Sultanate sits at the centre of a rapidly expanding regional market. This doubling has been seen in both life and non-life and has gone in parallel with increasing per capita incomes.

Market penetration still remains low, however, with an ASEAN average of 3.5% of GDP in 2014, according to a 2015 Global Counsel Report. This indicates much room for future growth. Only three of the ASEAN 10 have penetration levels higher than that average – Singapore, Thailand and Malaysia – with rates that if replicated elsewhere in the association would give a giant boost to existing total premiums. Global Counsel, for example, estimates that the jump for Indonesia would be worth $36bn in additional premiums.

With the regional marketplace increasingly liberalised under the trade agreements and blocs, a major potential opportunity for Brunei Darussalam’s insurers and for international companies based in the Sultanate is thus being created. All the nations except the second-wave states of Myanmar, Cambodia and Laos have made commitments to incrementally liberalise their insurance sectors. This reluctance is partly due to political sensitivities around issues such as the free movement of professionals across borders and regulatory capacities, with the members often at different levels of financial market supervision and sophistication. Yet the incentive to address the issues and produce the most attractive environment for insurers remains strong, given the large regional potential. An effort to standardise is being made by the ASEAN Insurance Council, which has produced a masterplan to spur industry growth, along with the ASEAN Insurance Integration Framework.

Strengthening Regulation

The Sultanate is strengthening its financial regulation via the Autoriti Monetari Brunei Darussalam, along with increased levels of professionalism and standardisation in the industry, thanks to bodies such as the Brunei Insurance and Takaful Association. Commitments have also been made to liberalise direct non-life insurance and reinsurance and retrocession, along with auxiliary insurance services. Yet a report by consulting firm Milliman in 2015 still ranked Brunei Darussalam sixth out of the 10 ASEAN member states in terms of insurance market liberalisation. Singapore came first, with Myanmar last. This indicated that the Sultanate still has much work to do if it is to establish itself as a base for regional and international insurance players anxious to take advantage of the AEC’s opportunities.


Year 2015 also saw the TPP also take a major step towards implementation. The agreement aims to boost standardisation of practices in insurance related to shipping and international commercial aviation. Financial institutions will also be allowed to transfer information among member countries for data processing, while the TPP also aims to streamline regulations on financial sector professionals from TPP countries working in each other’s industries.

While the TPP still needed approval by several national legislatures, this agreement and the AEC will likely mean increasing pressure on the Sultanate’s insurance sector regulators to liberalise in the year ahead while also boosting the need for local firms to increase competitiveness and outward focus.