In 2017 insurance companies wrote US$4,891 billion in premiums worldwide, with life insurance accounting for 54.3% and non-life for 45.7%.
Around 78.1% of premiums come from the advanced markets, where on average 7.8% of GDP or US$3,516 per capita was spent on insurance. Among markets, an average of just 3.3% of GDP or US$166 per capita was spent on insurance.
In Hong Kong, the Insurance Authority reported that total gross premiums in 2017 stood at HK$489.6 billion, up 9.1% from 2016. Hong Kong has a relatively mature insurance market as exemplified by the variety and complexity of insurance products to cater to the varied needs of businesses and consumers.
An industry in transition
The Hong Kong insurance industry itself is undergoing a fundamental transformation, in part driven by regulatory changes – including a new regulator, business pressures to reduce cost, disruption caused by Fintechs and Insurtechs, increase mergers and acquisition activities, and shift in customer behavior – particularly with the arrival of millennials both as customers and employees.
Belinda Au, general manager, distribution and marketing at Sun Life Hong Kong, says awareness among Hong Kong people of the value of insurance is high “whether it is for protection, medical or critical illness. But I don't think they really understand the difference so in a sense they still require financial advisory to help them actually choose,” she added.
While she conceded that people may go online to search for insurance products, at the end of the day, they will still want to purchase their insurance or investment policies through a face-to-face meeting. She sees this as remaining the trend for the foreseeable 5 to 10 years.
“So even though digital insurance is something new that is coming, I don't think that's going to be mainstream or a core market business model,” she opined.
Changing of the workforce
There is a healthy growth in the number of certified insurance agents in the city. The Insurance Agents Registration Board estimates about 56,464 as of September 2018. Au observed a positive growth in the number of professionals entering the insurance industry, although she also observed a growing population of professionals from the mainland [China].
According to Au, Sun Life Hong Kong is also focused on nurturing a younger population of insurance professionals. “Our Gen Y advisories today account for about 50% of our agency force which potentially will translate into a younger base of new clients,” she confided.
Au acknowledged that as a business undergoing digital transformation, a priority is making sure that “the client experience is something memorable, it is something that they actually want to continue so even though we are not one of the so-called big names in Hong Kong but our client services is still one of the best,” she concluded.
Watch the full video to hear more about Sun Life Hong Kong’s business strategy. Topics covered in the video include:
- The insurance industry landscape in 2019: 0:06-1:21
- What the changing profile of insurance agents mean: 1:21-2:49
- The biggest challenge for Sun Life Hong Kong in 2019: 2:49-3:38
EY’s Asia-Pacific insurance lead, Jonathan Zhao mature life insurers in many Asia-Pacific markets are placing increased focus on cost efficiencies across their businesses. For many, large-scale transformation programs and the adoption of digital platforms provide a solution. Insurers in this region have the added complexity of the critical relationship with agents and bancassurance partners, so solving for cost efficiencies should also focus on enhancing these distribution channels and not be an exclusively digital focus.
“Today’s intense margin pressures mean that cost efficiency is more important than ever. While many insurers across the region are leading the way when it comes to adopting emerging technology and working with InsurTechs, we believe it’s imperative for insurers to make the critical decision about what capabilities they should own and manage themselves and what to outsource,” concluded Zhao.