Savings, investment-linked insurance products boom amidst low rates

Hong Kong Business' annual insurance rankings reveal that the city’s top insurers yielded $688b in terms of assets in 2019.

Customer interaction remains the key priority of Hong Kong insurers as direct-to-consumer sales are projected to increase whilst savings and investment products are gaining traction amidst a low-interest rate environment. Insurers are also ramping up their rebranding and marketing efforts, especially of their traditional offerings.

Hong Kong Business’ annual insurers rankings have revealed that the city’s top 50 insurance firms yielded $688b in assets in 2019, a 7.4% increase from the previous year. AIA International bested everyone to the top spot with $141b in assets, followed by Prudential Life (Hong Kong) at second place with $111b. China Life moved up to the third spot with $76b, HSBC Life ended up in fourth place at $59b, and Manulife (International) rounded up the top five with $59b as well.

HSBC Life Hong Kong is still resilient despite the pandemic, recording a 15.2% market share in the life segment and accounting for 26% of the bancassurance channel, said CEO Edward Moncreiffe. For the coming 12 months, the insurer will offer more health and wellness products as well as boost its digital capabilities to make their products more accessible, he added.

As virtual appointments have now become a complement for physical meetings, HSBC Life has been arming their frontline staff with appropriate tools and are well-placed to conduct sales through clients’ preferred platforms, Moncreiffe said. Product sales on digital channels comprised 24% of HSBC Life’s total protection sales in 2020.

“We believe our flexible model of digital, face-to-face and a hybrid of both (virtual) represents the best interests of our customers to ensure that they have access to the insurance products and services needed,” Moncreiffe added.

All online applications are done through encrypted proprietary platforms to ensure data security, he assured, in addition to control systems that will limit the accessibility of data to appropriate parties.

Rebranding and direct-to-consumer sales
With most insurers pivoting towards digital channels, they have also been stepping up the rebranding and marketing efforts of traditional products. Moncreiffe agrees, citing an Admango study which showed a 78% YoY surge in the sector’s ad spending in January 2021, of which 74% was spent on life products and branding. With vaccinations being more widespread, he sees a gradual relief in the Greater Bay Area which would lead to insurers reactivating their marketing activities, he added.

“In a cluttered environment, it is important for insurance brands to establish a strong foothold in customers’ mind. For HSBC Life, we uphold our brand value ‘Because a promise is a promise’ and believe in family-centric marketing messages supported by authentic stories,” he said.

For a rebranding to work, Moncreiffe believes that “the winning formula” should be a data-driven and performance-led strategy coupled with a customer-centric brand promise. Marketers should also be able to respond to media and social consumption habits which have evolved over the years.

On the other hand, direct-to-consumer sales are also expected to boom in 2021, according to a KPMG study, which will require rapid upgrades especially in personal insurance. Insurers will have to integrate their brokers and agents at each step through digital interactions and interfaces as the transformation will require complex data, the report explained.

When asked about this, Moncreiffe assured that HSBC Life has been intensifying its digital capabilities and expanding its online product shelf to cater to their clients who prefer self-service. It has also introduced a digital appointment booking system which allows customers to book face-to-face appointments with insurance specialists whether in a physical branch or virtually, depending on their preference.

“The appointment booking tool enables a seamless online to offline journey and integrates a human touch from our insurance specialists into the process to fulfil customers’ insurance needs with greater convenience and better customer experience,” he said.

Sustainability
Per the KPMG report, growing exposures to climate change-related events, ranging from weather events to the pandemic, “are an integral part of new reality”. Boardroom discussions around environmental, social, and governance (ESG) will evolve particularly on corporate purpose, stakeholder capitalism, and climate risk and resilience.

“Insurers can move funding into greener investments, and will be increasingly challenged by stakeholders if they do not,” the report added.

HSBC Life’s insurance executive committee and management team are dedicated to integrating ESG initiatives throughout the business, with the insurer also pledging to publicise on an annual basis its progress in implementing ESG principles through its UN Environmental Programme Principle for Sustainable Insurance (UNEP PSI) report, Moncreiffe said. The insurer was involved in the original drafting and development of the PSI Initiative and became a signatory to the PSI in 2013.

“As one of the only two Asian insurers sitting on the UNEP PSI board, it shows clearly the importance on how we take sustainability in HSBC Life, and that we have seen through our sister bank and insurance companies in the West how ESG will quickly become much more than a ‘reputational issue’ and much more interwoven with how customers assess insurers,” he explained.