Insurtech, hiring spree reshape Hong Kong's insurance scene

The rolll-out of the IFRS 17 calls for massive hiring of regulatory professionals.

Armed with a 30.30% increase in its net premiums as of end 2017 to HK$125.2b, AIA International stole the crown from Prudential HK Life in the annual Insurance Industry Survey. The former top placer succumbed to a second place finish as its premiums slipped 1.42% YoY to HK$99.22b as of end 2017.

Rounding up the top five are China Life (HK$74.31b), HSBC Life (HK$67.1b), and Manulife International (HK$50.54b) which have all defended their third, fourth, and fifth spots, respectively. In total, the top 50 insurance firms operating in Hong Kong held on to a whopping HK$623b worth of net premiums back in 2017, up 1.47% from the HK$614b worth of net premiums they had back in 2016.

Forging allies
One of the key trends that shaped the insurance sector in 2018 that is expected to spill over to 2019 are the alliances forged between insurance companies and tech players. Early this year, insurers such as MetLife, AIA, Allianz, and Zurich announced some of their insurtech plans after the Hong Kong Insurance Authority rolled out a sandbox for insurers to flexibly partner with tech talent.

Guy Mills, chief executive officer, Manulife Hong Kong, said that with insurtech, some products such as health insurance as well as mutual funds can actually be sold online.

Don’t beat them, join them
To play the digital game well, insurers in Hong Kong have learned to make insurtechs their allies in coming up with personalised and accessible insurance solutions.

For instance, Manulife launched its ManulifeMOVE programme in Hong Kong, one of the first to integrate an innovative healthtracking programme with insurance solution that rewards customers who maintain active lifestyles with discounted premiums. In January 2018, Manulife launched claimsimple.hk, an e-claims solution that lets customers make a medical insurance claim online anytime, anywhere via their mobile device or PC in less than a minute.

Meanwhile, Old Mutual International rolled out Wealth Interactive, an online platform to keep track of investment performance no matter where consumers are, whenever they need it. Christal said that it is not only an online servicing platform, but a channel for distributors to provide better service to their customers.

“Alongside greater customer access, it allows advisers to leverage technology and tools to manage customers’ portfolios whilst remaining close to them. Wealth Interactive also provides data to support client segmentation, so advisers can ensure a consistent and structured approach to servicing clients,” Christal added.

Insurance of the future
In terms of insurance education, MetLife Hong Kong’s MetLife Discovery allows a quick and easy access to information about insurance and the specific terms of insurance coverage that a certain demographic is considering. Information includes money that consumers should expect to spend and general price indicators for the cost of such a coverage.

Mark Christal, head of region in Northeast Asia, and chief executive officer, Old Mutual International, Hong Kong, said that digitalisation has definitely helped streamline processes and give customers greater access to their finances amidst their increased expectations. He added that this has become a key part of the value proposition that insurance companies and advisers offer their customers, presenting a greater opportunity for them to develop deeper and longer relationships with customers.

Christal said that digitalisation for insurance not only means roboservices, but also complex financial planning for evolving customer demographics. According to him, insurers are seeing more highly mobile individuals with different assets across countries and requiring professional advice on holistic wealth, tax, and legacy planning.

Lee Wood, chief executive officer, MetLife Hong Kong said that four changes are likely to further transform the insurance market in the future: digital transformation, the importance of a trusted advisor, increasing health consciousness, and transparency and trustworthiness.

According to him, insurance will be enormously different in the future, and data analysis will revolutionise how insurers meet their customers’ changing needs. He added that the ability to mine big data for deep insights has radically altered the dynamics of how one becomes “the trusted advisor”.

Gearing up for IFRS implementation
Industry players have also been keen on their preparation for the IFRS 17 implementation by 2021.

“IFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation features,” PwC Hong Kong said.

Its impending roll-out made Hong Kong insurers very busy for the first half of 2018, recruitment firm Argyll Scott said in a report.

“Most insurance organisations focused on hiring regulatory professionals who could help with the IFRS 17 implementation, HKIA flagship Sandbox programme drew several new players into the market and as a result, created a steady level of hiring needs,” the firm noted.

According to Argyll Scott, salary increments of around 15-20% can be expected by those working in the insurance industry considering its amplified activities.

“With IFRS 17’s deadline in 2021, we expect this to continue to be the most talked about subject and the hiring trigger for most insurers in Hong Kong, though it will be a challenge to identify talent, given not too many are familiar with the new regulations,” the firm said.

Greater waves from the GBA
Apart from Hong Kong’s internal landscape that looks positive for insurers, the coming years appear bright for the industry with the push for the Greater Bay Area which aims to connect the economic resources of 11 major Chinese cities, including Zhuhai, Dongguan, Macau, and Hong Kong. With a total population of 69 million and a collective GDP of about US$1.5t which is comparable to the size of Korea, the Greater Bay Area is set to open a realm of opportunities for many industries in Hong Kong, including insurers.

The Securities and Futures Commission (SFC) revealed that by Q3 2018, individual license applications have started to surge by 15% to 2,364. Meanwhile, applications by firms grew by 6% over the same period. SFC-licensed individuals reached 46,063 whilst firms hit 2,844, data from the agency suggested.

“The development of the Greater Bay Area spurs the flow of production factors, consolidates Hong Kong’s advantages in the financial market and supports the growth of real economy in the region, giving a fresh impetus to our insurance sector,” chief executive Carrie Lam said in her 2018 Policy Address. Lam assured that her leadership will implement various measures, such as tax reliefs, to promote the development of marine insurance

Salary increments of around 15-20% can be expected by those working in the insurance industry considering its amplified activities.

Guy Mills, chief executive officer, Manulife Hong Kong Mark Christal, head of region in Northeast Asia, and chief executive officer, Old Mutual International, Hong Kong and underwriting of specialty risks in Hong Kong to seal the SAR’s status as an international insurance hub. Lam said that Hong Kong will continue to push to expand market access for Hong Kong’s insurance sector in the Greater Bay Area.

“As a first step, we’ve proposed allowing Hong Kong insurers to set up postsales service centres in the Bay Area,” Lam explained. “These would serve Mainland policyholders of Hong Kong insurance, as well as Hong Kong policyholders living or working in the Area.”

Meanwhile, finance secretary Paul Chan revealed that the China Banking and Insurance Regulatory Commission announced an arrangement that when a Mainland insurer cedes business to a Hong Kong qualified professional reinsurer, the capital requirement of the Mainland insurer will be reduced.