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Tuesday, December 2, 2014: Management Conference
The Ritz-Carlton, International Commerce CentreHong Kong
Insurance Industry Asia 2015 –Strategic Priorities for Profitable Growth
Management Summary
Premium Partners
1
InsuranceCom Asia 2014: Insurance Industry Asia 2015 – Strategic Priorities for Profitable Growth
InsuranceCom Asia Senior Executive Management Conference on December 2, 2014 in Hong Kong
The second InsuranceCom conference in Asia, Insurance Industry Asia 2015 – Strategic Priorities for
Profitable Growth, discussed the prospects of Asia as the world’s fastest growing insurance market,
and the emergence of rapid technological change and development. Besides addressing the important
macroeconomic and social developments shaping the region’s insurance industry, the conference was
dedicated to analysing the opportunities and challenges represented by the growth in digital media
and advanced analytics.
Moderated by Dr Kai-Uwe Schanz, Chairman and Partner of Dr. Schanz, Alms and Company AG, the
conference brought together decision-makers of the Asian and global insurance industry to exchange
insights into how to tackle these new regional and global issues with a view to better preparing
participants for the challenges ahead.
Factors Shaping the Global Insurance Industry
In order to set the stage Dr Kai-Uwe Schanz provided a high-level perspec-
tive on the factors currently shaping the global insurance industry. These
include the shifting global balance of power, the rise of big data, the
emergence of alternative sources of capital, and the tighter regulatory
framework following the global financial crisis. The many economic,
geopolitical, environmental, technological and societal risks present the
insurance industry with both challenges and opportunities. It is encouraging
to note that many of these global risks are insurable in principle. However,
Dr Schanz opined that the insurance industry is not currently doing enough
to capture the potential provided by these risks. As the gap between
economic and insured losses keeps widening and the industry arguably loses ground, global insurance
leaders will face a big challenge in preserving the sector’s relevance.
Dr. Kai-Uwe Schanz
Partner & Chairman, Dr.
Schanz, Alms &
Company AG
Conference Moderation
2
The Gap Between Economic And Insured Losses Has Widened
Figure 1: Widening gap between economic and insured losses globally, 1980-2013
Accompanying the changing risk landscape is the rise of emerging insurance markets. While emerging
markets had merely roughly 5% of global share at the beginning of the century, they now have about
15%, a number that is expected to rise to 30% in a decade’s time. This offers great opportunities to
MNCs operating in high-growth areas, borne out by the spectacle of insurance players venturing from
mature markets to emerging markets.
Emerging Insurance Markets Are Rising Fast
Figure 2: Global share of life and non-life premiums by region, 1962-2023
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Another opportunity is presented by data fluency, which will transform the way insurers interact with
customers, assess risk and design solutions, and operate and recruit talent. A final major development
to watch is the entrance of alternative capital in the wholesale segment of the market. US$ 50 billion
has been allocated so far by institutional investors to insurance risk as a new asset class. However, this
alternative capital could grow to US$ 250 billion if pension funds globally commit just 1% of their
assets.
Moreover, the new regulatory paradigm that has followed the global financial crisis, accompanied by
the near-demise of AIG, has led to the tightening of regulations, notably the Dodd-Frank Act of 2010,
and the Financial Stability Board’s’s assessment of systemic risks associated with Systemically
Important Financial Institutions, which identified 9 insurance groups for higher capital and supervisory
requirements. Finally, the International Association of Insurance Supervisors (IAIS) is planning to
develop a first-ever risk-based global insurance capital standard, applicable to internationally active
insurance groups.
Hong Kong’s Role Amidst Global Insurance Trends
Guest of Honour Ms Au King-chi, Permanent Secretary for Financial
Services and the Treasury, the Government of the Hong Kong SAR,
emphasised the potential of Hong Kong as one of the most open
insurance centres in the world, with more than 150 authorized insurers,
including more than half of the world’s top 20 insurers. Despite being a
small city with only 7 million people, Hong Kong has achieved an
insurance density (annual premium spend per capita) of US$ 5,000,
ranking first in Asia and 6th globally.
Describing the tremendous potential of the Asia-Pacific insurance market,
Ms Au emphasised that the total direct insurance premium in the Asia-
Pacific Region has grown from US$ 1,600 billion in 2003 to US$ 2,500
billion in 2012. She pointed out two trends in the insurance market: first, according to a report
published by the United Nations Development Programme, Asia-Pacific would comprise two-thirds of
the global middle class by 2030, representing a greater demand for health insurance, travel insurance,
and retirement planning products. Second, Asia’s younger generation, which has increasing economic
clout, tends to prefer simple products, transparent pricing and quick delivery of insurance products.
Miss Au King Chi
Permanent Secretary for
Financial Services and the
Treasury,
The Government of the
Hong Kong Special
Administrative Region
4
The Hong Kong Government has unravelled a slew of policy initiatives to support the insurance
industry. For example, it is setting up an independent insurance authority to enhance policyholder
protection and maintain the stability of the insurance industry, as well as introducing measures to
attract new players, new products and services, and more liquidity to its market, with a view to
reinforcing Hong Kong’s status as a regional insurance hub. It is also providing tax and regulatory
concessions, and launching promotional efforts, to encourage more enterprises, especially those from
the Mainland, to set up captive insurers in Hong Kong.
Moreover, Hong Kong hosts the largest pool of RMB liquidity outside the Mainland, amounting to over
1 trillion RMB, which is able to support a full range of RMB products and financial activities. The RMB
insurance business, since its introduction in 2010, has become one of the major drivers behind the
long term growth of Hong Kong’s insurance industry, with about 190,000 policies issued with a total
premium of close to RMB 44 billion. The Hong Kong government has sought the People’s Bank of
China’s agreement to allow Hong Kong insurers to participate in the Mainland inter-bank bond market
for matching their long-term RMB liabilities. The Hong Kong government is encouraging
Mainland insurers to cede reinsurance in RMB in Hong Kong so that they can better manage their
currency risk by minimising their mismatch between reinsurance and underlying economic activities.
Hong Kong is also Asia’s largest asset management centre. Last year, its total assets under management
reached a record high of HK$16 trillion with 70% of the funds coming from overseas. In order to attract
more investment funds to domicile in Hong Kong, the Hong Kong government has introduced an open-
ended fund company structure through legislation, extended profits tax exemption to private equity
funds, and waived stamp duty for all exchange-traded funds. A related recent development is the
Shanghai-Hong Kong Stock Connect Programme launched in November 2014, which seeks to promote
the two-way opening up of the capital markets of Hong Kong and the Mainland. Under the Stock
Connect programme, investors in Hong Kong may invest directly in 568 Mainland A-shares, and
Mainland investors in 266 Hong Kong stocks.
Furthermore, the Hong Kong government is conscious of the need to attract more talent and skilled
personnel to join the insurance profession. Measures being undertaken include publicity drives on
financial careers and exposure schemes such as trainee programmes and internship networks in
collaboration with the insurers. Also, the government is formulating incentives for practitioners to
sharpen their professional skills and prepare themselves for senior corporate positions.
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Strengthening Investment Capability and Achieving Profitable Growth
Mr Liang Xinjun, Vice Chairman and CEO of Fosun Group, China’s largest
private conglomerate, provided an analysis of key macroeconomic trends
and investment opportunities in Asia and globally and elaborated on
Fosun Group’s investment strategies.
The low interest rate environment globally reduces the costs of liabilities
and increases pressure on earnings and assets. In particular, the
withdrawal of quantitative easing by the US Federal Reserve will lead to
an increase in interest rates and a rise in LIBOR. Conversely, the European economy is at its bottom
and will probably maintain a low interest rate in the medium term. Russia has recently faced the
pressure of a US$ 100 billion refund, providing Russian assets on the open market. In Japan, the highly
indebted government has a long-term incentive to maintain low interest rates. There will be higher
growth in local asset prices in the United States and Japan, as financial assets in Europe and Japan
have low finance costs. There will also be considerable growth in consumption in China and the United
States, and investment opportunities in Russia for the short term.
Describing the development model of Fosun Group, Mr Liang called his Warren Buffett-inspired model
“Insurance + Investment”, combining professional investment capability with insurance. Out of total
assets of RMB 313,314 million, the Group has 37% in insurance and the rest in industrial operations,
investment and asset management. The Group’s investments are diversified across a large number of
industries, regions and types, allowing its individual management directors to have their own
investment platforms. In terms of philosophy, the Group adheres to value investing and anti-cyclical
investment, and emphasises knowledge and understanding of newly-entered industries and regions
rather than instant achievements.
Fosun Group has an impressive track record of providing insurance companies with its skills in
investing in different markets. For example, Fosun has facilitated 32 investment projects for Fidelidade,
Portugal’s largest insurance company, and 57 for Peak Re, a Hong Kong-based reinsurer. Since many
insurance companies rely too much on rating agencies, Fosun’s strength lies in being able to go beyond
standard methodologies and understand the market to make investment decisions, thereby getting
higher returns.
Liang Xinjun
Vice Chairman and CEO,
Fosun Group
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In terms of global investment opportunities, Mr Liang advised that with the expected rise in US interest
rates, US opportunities are generally reliable, while consumption in Europe will take longer to recover.
Meanwhile, Russia presents a great opportunity due to refund pressures, although there remains a
risk of continued or even tightened Western sanctions.
There are three opportunities in China: the emergence of the middle-class means there is great
potential for products and services catering to them, such as tourism, high-end food and fine dining,
video and media entertainment. The rising use of mobile internet and combining mobile internet with
traditional industries also means there is great potential in investing in related industries and services.
Finally, the growing demand in China’s healthcare industry especially senior care and rising focus on
environmental protection and more carbon-efficient energy also means there will be growth in related
‘green’ industries, products and services. Mr Liang concluded by reiterating Fosun’s commitment to
continue investing in more insurance companies in Europe, Japan and the US, and develop its
insurance business in China.
Socio-Economic Challenges: Winning Strategies and Opportunities
Following from Mr Liang’s talk, Mr Robert Burr, Head of Life & Health Asia,
Swiss Reinsurance Company Ltd, discussed the socioeconomic factors
that are driving the region’s industry. He declared that life insurance has
changed: insurers are no longer dealing with the consequences of
premature death, but the consequences of extended life. To illustrate
this point, he emphasised that more than a million people in Asia turn 60
every month.
Although Asia is seen as a young region with a demographic dividend, it is also undergoing a demo-
graphic transition. In light of the impending ‘demographic tax’ it will have to bear, it is learning from
other parts of the world how to fund ageing. As rapid ageing drives significant economic, social and
political costs on Asia, there will be a gap between the financial life people expect and the financial
life they will get. One example is the ‘healthcare gap’ in Asia; even if governments and society continue
to fund healthcare at a stable share of GDP, there will remain a sizeable gap of US$ 197 billion by 2020.
Robert Burr
Head of Life & Health
Asia, Swiss Re
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The Asia Insurance Outlook – An Economic Perspective
Mr Clarence Wong, Chief Economist Asia, Swiss Reinsurance Company Ltd,
discussed how Asia’s economic outlook would affect the region’s
insurance market. He noted that slower economic growth had resulted in
slower global premium growth, since insurance premium growth is highly
correlated with the economic performance of individual markets.
Slower Economic Growth Has Resulted In Slower Global Insurance Premium Growth
Figure 3: Global insurance premium growth in industrialised countries and emerging markets (adjusted for
inflation, % change year-on-year)
In the US, the outlook is good and will be reflected in higher interest rates in 2015. In the Euro area, a
risk of deflation persists, and quantitative easing will be needed to stimulate the economy. In China,
growth is slowing and the People’s Bank of China will keep up with a loose monetary policy to support
growth.. In Japan, the sales tax hike has hurt growth, and despite high hopes pinned on Abenomics,
Japan is technically in a recession and needs additional stimulus to support asset prices and depreciate
the yen. Overall, the outlook is challenging, with the US improving but economic prospects every-
where else slowing.
Clarence Wong
Chief Economist Asia,
Swiss Reinsurance
Company Ltd.
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Despite the challenging economic outlook, fundamental drivers of insurance demand remain intact.
This includes the rise of the middle-income class and urbanisation. By 2030, two-thirds of the global
middle class will be found in the Asia-Pacific region. Urbanisation will be one of the key drivers of
economic growth and insurance demand. Moreover, the establishment of the ASEAN Economic
Community (AEC), though a work-in-progress, could potentially have a huge impact on insurance if
companies will be able to sell products cross-border.
The economic reforms pursued by various countries will also have an impact on insurance. In China,
the state policy of rebalancing towards domestic consumption from exports could result in slower GDP
growth. But rising household incomes and purchasing power could increase spending on services, thus
boosting insurance demand particularly in personal lines of insurance. In India, market liberalisation
and the government’s emphasis on ‘Made-in-India’ could create investment opportunities. The Indian
Cabinet’s endorsement of a proposal to raise the foreign investment cap in domestic insurers from
26% to 49% would benefit foreign companies entering the Indian insurance market. In Indonesia, the
newly elected government has promised to increase infrastructure investment to address the large
infrastructure gap in the country. This increase in infrastructure spending is likely to spur the growth
of commercial insurance in Indonesia, benefiting aviation, marine, engineering, construction and
liability lines.
Turning on to the region's demographic trend, Mr Wong noted that Asia is currently reaping a
demographic dividend, but different markets are at different stages of ageing. While Indonesia and
India still have a relatively young workforce, China is already past its demographic dividend peak, and
ageing will take place quickly, leading to a ‘demographic tax’. Thus, the insurance industry needs to
focus on ‘protection gaps’, especially the health protection gap.
Meanwhile, low interest rates keep pressure on profitability, in what Mr Wong described as the ‘new
normal’. Although the return on investment (ROI) of large life insurance companies has now stabilised,
it remains far below pre-crisis levels. Meanwhile, the capitalisation of life insurance companies has
increased significantly since the financial crisis. Mr Wong advised that relying on interest rate
normalisation is not an adequate strategy. Although economists have kept predicting a rise in interest
rates, this has not materialised. Structural changes in the global financial system are a reflection of
how the US Treasury has been moving in the last decade. Structural dislocations should be taken into
account in the new normal. He boldly predicted the onset of the “Asian Decade” – Asia is expected to
overtake North America and Western Europe by 2017 and become the biggest contributor to the
world insurance premium.
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The Coming of the ‘Asian Decade’: Asian Premiums Will Lead From 2017
Figure 4: Total premiums in Asia, North America and Western Europe, 2000-2024
China: Protection for Economic Growth and Social Stability
Dr Zhaoyi Meng, Executive Director and Deputy General Manager of
China Taiping Insurance Group Ltd and China Taiping Insurance (HK)
Company Limited, discussed China’s strategies to promote sustainable
economic growth. In a global context of slow economic growth in both
mature and emerging markets, China’s economy is being affected by
downward pressures after a period of rapid and persistent growth.
Moreover, growth in China has been uneven, with significant levels of
poverty remaining. Where will China go from here?
Firstly, China needs to pursue reform and open up and cooperate with
its international partners. In particular, China should focus on economic
restructuring and industrial upgrading, supported by fiscal, financial, investment and other policies,
and develop its tertiary (services) sector (currently only 46% of GDP).
Dr. Zhaoyi Meng
Executive Director and
Deputy General Manager
of China Taiping
Insurance Group Ltd and
China Taiping Insurance
(HK) Company Limited
10
How can China implement economic restructuring? By using three methods: top-level regime design,
government support through specific policies, and involving society and the private sector. In
particular, China can further promote interest rate marketization and the internationalisation of the
renminbi (RMB) in order to provide financial support to the real economy and mitigate potential risks.
Interest rate marketization could support the growth of the real economy and impact the pricing of
insurance products, but would put pressure on the operations of commercial banks, making them
more vulnerable to market variations. The internationalisation of the RMB would boost bilateral trade
and cooperation, and have a positive influence on the insurance industry.
Although China is moving towards an internationally-recognised insurance system, this will take a long
time. In the immediate future, China should focus on addressing its challenges such as investing in
infrastructure, funds and capital markets, developing e-commerce, and making use of big data.
Southeast Asia: Winning Strategies in Health, Life and Pension
Mr Charles Barrows, CEO, Aviva Hong Kong Limited, discussed the trends
shaping the Asian insurance industry, and how to use digital technologies
as a driver for growth. These trends include the rise of data, the power of
local and virtual communities, ageing populations, increased education
and awareness, disruptive technologies, and shifting wealth.
In particular, Mr Barrows noted that changing demographics in Asia
present the insurance industry with many opportunities. Insurers can
respond by changing their underwriting mindset, offering better pricing,
longer-term products, products with guarantees, and embedding retirement and health services to
truly serve customers’ health and retirement needs. Good investment vehicles are required to back
products being funded. Customers seek simplicity, value and reward for loyalty.
There are many opportunities presented by digitalisation in Asia in providing better customer service
and increased engagement. Given that the number of potential digital-banking consumers in Asia
could rise to approximately 1.7 billion by 2020, there is a need to have a genuine digital relationship
with customers. By 2020 there will be 50 billion connected services. This will present a great
opportunity for affinity partnerships, bringing data and analytics together in a digital ecosystem.
Charles Barrows
CEO
Aviva Hong Kong Limited
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Senior Executive Plenary Discussion: Market and Industry Trends
What is the impact of interest rate changes? What are the opportunities of ASEAN integration? How
can China increase its insurance penetration?
Panellists expected interest rates in the US will start increasing from mid-2015 due to the end of
quantitative easing, while interest rates in Europe, Japan, China and most of Asia could remain low. In
the area of insurance, the normalization of interest rates would increase competition but also help
insurance companies’ investment returns. From a customer’s perspective, persistently low interest
rates would mean that the pension gap would increase. Employees would need to work longer and
save more.
Although the ASEAN Economic Community (AEC) is not likely to be completed in the immediate future,
it will usher in important developments like regulatory convergence. Insurance integration could
follow the ASEAN minus-X approach: two members which are ready to open up their markets to each
other will do so first, and then other markets will join the group whenever they were ready. Thus the
AEC will be a great opportunity from a marketing and branding standpoint.
Regarding the prospects of insurance penetration in China, Dr Meng opined that premiums could
increase from 1.72 trillion RMB to 2 trillion RMB by 2020. China’s ambition to increase insurance
penetration to 5% is also possible given its annual growth of 21%. However, China will face difficulties
due to interest rate marketization and tariffs, bringing more competition to the industry, and causing
problems for SMEs to compete with bigger enterprises. Mr Wong commented that the Chinese
government is encouraging the insurance industry to help tackle major social issues like aging popu-
lation and environment pollution, but it remains to be seen how it will support the insurance industry
with policies such as mandatory insurance and tax benefits. With the potential blurring of the line
between private and social insurance, insurance companies will have to balance corporate responsi-
bility and commercial viability.
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Digital Business Models, Disruptive Forces in the Asian Industry
Graham Handy, Global Insurance Customer Leader of EY, discussed how
digitalisation had disrupted the insurance industry in Asia. Based on a
survey done by EY on 24,000 customers, he found that there were
significant relationship issues between customers and retail insurers, and,
in particular, a lack of interactions. In general, he said, “customers are
crying out for more contact and communication with insurers”. Digital
transformation could close this interaction gap, presenting opportunities
for customer engagement at reduced costs.
Figure 5: EY Global Consumer Insurance Survey 2014
Graham Handy
Global Insurance Customer
Leader
EY
13
How Digital Thinking Can Transform Face-to-Face Insurance in Asia
Hugh Terry, Founder of The Digital Insurer, analysed the impact of digital
insurance in Asia. Seen as a cutting-edge topic two years ago, the digital
experiment had now produced success stories emerging in Asia. He
identified two digital megatrends: firstly, traditional business models are
being redefined by new technologies. Secondly, digital tools are based on
customer-centricity. As sellers of an intangible product, how can insurers
take advantage of this?
Digital thinking has created three changes in customer behaviour. Firstly, customers conduct research
on-line and purchase anywhere, including for financial services. Secondly, customers act through
multiple channels, such as online for travel insurance and offline for retirement insurance. Thirdly,
customers have less trust in financial services brands. In this context, insurers should transform
existing face-to-face models, create or participate in new models, and manage existing models for
profit.
Having a digital strategy allows insurers to revisit their fundamentals, such as outsourcing customer
services to advisers, and presents opportunities to get more leads, better service, and better selling.
In particular, he advocated the use of point-to-sale tablet toolkits as the best opportunity to
commence transformation. The iPad is widely used and simple, and can help to improve sales, leads
and customer service. Moreover, tablet toolkits can be implemented without huge back-end system
disruptions. However, it is important to create a highly engaging tool that advisors would use, which
would achieve an increase in sales. Unless the last dot is connected, all other benefits would not
materialise.
Digital thinking has produced the success stories of FWD and AIA in tablet toolkit innovation, both of
which have achieved impressive levels of increased productivity. In the FWD case, using digital
technology in Indonesia helped the company attract talented advisors and make their service more
attractive and competitive. In the AIA case, the company managed to build and employ the iPOS
(iPoint of Sale) solution in 10 markets in less than 2 years, providing users with a ‘game’-like experience
on their tablet interface. The company achieved increased productivity and hugely transformational
secondary benefits, with more than 50% of advisors adopting the tool in 6 markets.
Hugh Terry
Founder
The Digital Insurer
14
The Digital Transformation of Face-To-Face
Figure 6: The Digital Advisor Business Model
Lead generation often comes from an online and more professional sales force, as well as a revolution
in customer service. To be successful, insurers should establish initiatives as strategic priorities and
finance them; distribution leaders should lead from the front. Above all, it is not just about technology
but also about a need to invest in change management, communication and training to make sure
transformation is successful in practice. With the rise of digital technologies, the insurance industry is
at a big pivot point. Companies need to grasp opportunities or be in an expensive race to catch up.
How Telematics Can Transform Motor Insurance
Mark Grant, Member of the Board of Directors and Founder, Insure The
Box, presented a fascinating case study of using telematics to transform
motor insurance. His company was created in 2009 and has sold over
425,000 policies, making an impact on the UK insurance industry.
The UK motor insurance market is one of the most competitive in the
world because of its ability to price on a daily basis. More than 130
brands are competing for 21 million private consumers. The dominant
use of price comparison sites, false claims and unlimited liability have an impact on margins and make
the market even more challenging.
Mark Grant
Member of the Board of
Directors and Founder
Insure The Box
15
In this context, Insure The Box provides a fully end-to-end direct insurance platform. Encompassing
the ability to use a wide range of digital devices and collecting more than 1 Billion miles of data per
year, it combines innovative technologies with an exceptional customer experience that encourages
users to drive safely.
Insure the Box collects data using a box bolted to the chassis on motor vehicles. The box uses 2G data,
sending data at intervals or in real time when an accident occurs. Box fitters are provided with tablets
with which they can record the vehicle’s condition. This gives the insurer powerful anti-fraud tools
and a successful method of recovering stolen vehicles. Moreover, the premiums are cheaper, the
claims service better, driving standards of customers improve, and lives are saved.
Telematics also provide a “Super Direct” customer experience. By using internet portals, social media
and live chat, it is attractive to younger customers. Information is fed back to customer at a regular
basis, incentivising them to drive safely. In the case of accidents, the information can also be used to
alert emergency services, helping to save lives. Some challenges of telematics include data protection,
privacy issues, building trust with the customer, building the infrastructure, collecting, storing and
analysing data, and regulatory compliance. However, given the value of telematics in providing
personalised services to customers, Mr Grant argued that it has a bright future ahead.
Lachlan Ma, Associate Director, Samsung Electronics H.K. Company
Limited, also showed how digital technology could offer benefits such as
increased mobility, lower operating costs, data protection, and privacy.
In particular, Samsung has proposed technology solutions to allow the
coexistence of mobility devices (phones and tablets) for personal and
corporate uses.
Lachlan Ma
Associate Director
Samsung Electronics H.K.
Company Limited
16
How Multinationals Can Win In Asia
In the last session of the day, Alpesh Shah, Senior Partner and Managing
Director, The Boston Consulting Group Mumbai, evaluated the
opportunities for MNCs in the Asia-Pacific region. He pointed out that
although Asia-Pacific is a rapid growth market, it is very diverse. For
example, the emerging ASEAN market currently has a low share for MNCs.
International Investors Face Significant Challenges in Asian Markets
Figure 7: MNC shares in selected markets
What are the elements that contribute to MNC success in Asia? Mr Shah opined that the most
successful companies bring successful businesses, rather than just planting flags, and often strike deals
(M&A, joint ventures, partnerships). In addition, MNCs should decide between local and regional
strategies. They should groom new local talent instead of taking from the same pool of global
executives. While keeping an eye on profits, they should dare to be different, and have a ‘right to win’
mentality.
Alpesh Shah
Senior Partner and Managing
Director
The Boston Consulting Group -
Mumbai
17
How to Win? 3 Questions for Insurers
Figure 8: Winning strategies for multinationals in Asia
Marcelo G. Teixeira, Group Head of Insurance, HSBC, explained that HSBC
was not moving away from insurance, but needed to adapt to Basel 3
regulations by keeping their insurance business under 10%. He
emphasised HSBC’s strategy of building complementarities between the
manufacturing capability of HSBC and its partners.
HSBC’s objective is to fulfil the needs of 50 million customers; in Asia it
has currently 6 million customers. In addition, HSBC aims to go through 5
different needs (retirement, investment, protection, education, legacy
planning). Asia is lagging in the last 3 needs.
Marcelo G. Teixeira
Group Head of Insurance
HSBC Holdings plc
18
David Fried, Chief Executive Officer, Emerging Markets, QBE Insurance
Group, said that the respective value of banks and other distribution
channels depends on each party’s value proposition. Relationships with
banks, agents, brokers and affinity groups are all important. Within the
commercial and specialty insurance space, the Group aims to be a leader
through various different channels, providing product expertise through
organic growth.
Geoffrey Riddell, Member of the Group Executive Committee, Regional
Chairman of Asia-Pacific & Middle East and Africa, Zurich Insurance
Group Ltd, felt that bank insurance is less important in Asia than
elsewhere in the world. While there is strong bank insurance in Spain,
Italy, Germany and the US, in Asia, success is achieved more through
focusing on customers and propositions.
The panellists generally acknowledged that developing local talent
remains a challenge for multi-nationals, which are generally feeding from
the same pool. Instead, they should focus on creating full mobility
through their networks, or bring people from other financial services
industries. However, one problem was the existence of mobility restric-
tions put in place by regulators, for example in Indonesia, that exacer-
bated the difficulty of hiring talented people from these countries.
With the rising ambitions of local and regional players, there was a consensus that the competitive
landscape of the insurance industry will have an increasing focus on conduct relative to solvency. With
Chinese, Japanese, Korean and ASEAN insurers and reinsurers expanding throughout the globe, there
will also be an increased focus on the influence of these players on the Asian and global market. Banks
owning insurance companies might find partnerships with third parties to be more capital efficient,
causing the dominance of a combination of multinationals and large regional players in a context of
fairly abundant capital. In addition, depending on the regulatory regime, a large number of non-
insurers and retailers might take the opportunity to enter the insurance market.
David Fried
Chief Executive Officer,
Emerging Markets
QBE Group
Geoffrey Riddell
Member of the Group
Executive Committee,
Regional Chairman of
Asia-Pacific & Middle East
and Africa
Zurich Insurance Group
Ltd.
19
Finally, they established that “insurance is not static but forever evolving” – it is precisely the
emergence of new approaches that enables people to generate profits. In particular, Asia presents
opportunities for new approaches through distribution due to the high use of mobile phones and
social media, although this would also lead to the creation of new competitors. Finally, digitalisation
creates a need for complementary channels and delivery of the right products to the right channels.
There was a general agreement that the insurance market in Asia is under-penetrated. The industry is
likely to be driven forward by growing consumer needs, wealth, and awareness of insurance. However,
insurers have to come up with new technologies and products for risks which, although deemed to be
uninsurable today, might be insurable in the future.
Conclusion
Insurance Industry Asia 2015 – Strategic Priorities for Profitable Growth marked the second time the
InsuranceCom conference was held in Asia, reflecting the region’s growing economic and geo-political
clout. Asia as a whole is predicted to overtake Europe and North America by 2017, and become the
world’s largest insurance marketplace. Factors such as the end of QE in the United States, the
liberalisation of the Chinese economy, rapid urbanisation, the rising middle class and Asia’s changing
demographic structure, and an increased focus on energy and the environment provide huge
opportunities for the insurance industry.
Within this context, the rise of digital technologies also represents a significant disruptive force for the
industry. Consumers are empowered by these new technologies, and their expectations in terms of
products and services have changed considerably. While insurance companies need to adapt their
strategies to this new context, they should bear in mind that the fundamentals of insurance will not
change: winning trust, and providing sound advice and customer service.
20
Speakers and Panellists:
Miss Au King Chi, Permanent Secretary for Financial Services and the Treasury, The
Government of the Hong Kong Special Administrative Region
Liang Xinjun, Vice Chairman and CEO, Fosun Group
Robert Burr, Head of Life & Health Asia, Swiss Reinsurance Company Ltd
Clarence Wong, Chief Economist Asia, Swiss Reinsurance Company Ltd
Dr. Zhaoyi Meng, Executive Director and Deputy General Manager of China Taiping
Insurance Group Ltd and China Taiping Insurance (HK) Company Limited
Charles Barrows, CEO, Aviva Hong Kong Limited
Graham Handy, Global Insurance Customer Leader, EY
Hugh Terry, Founder, The Digital Insurer
Mark Grant, Member of the Board of Directors and Founder, Insure The Box
Lachlan Ma, Associate Director, Samsung Electronics H.K. Company, Limited
Alpesh Shah, Senior Partner and Managing Director, The Boston Consulting
Group Mumbai
David Fried, Chief Executive Officer, Emerging Markets, QBE Insurance Group,
Geoffrey Riddell, Member of the Group Executive Committee, Regional Chairman of Asia-
Pacific & Middle East and Africa, Zurich Insurance Group Ltd
Marcelo G. Teixeira, Group Head of Insurance, HSBC Holdings plc
Moderator:
Dr Kai-Uwe Schanz, Chairman & Partner, Dr. Schanz, Alms & Company AG
Hong Kong, December 2, 2014
The next InsuranceCom Asia conference will be held on November 10, 2015 in Hong Kong.
21
Lector CLS Communication – the leading language services provider (write – edit – translate)
located in Asia, Europe and North America
Author Yvonne Guo, PhD Candidate, National University of Singapore and Executive
Assistant, St.Gallen Institute of Management in Asia
Host uvision develops and leads independent and sustainable executive management
communities in Central- /Eastern Europe and Asia.
Conferences: BankersCom, InsuranceCom, EnergyCom and PropertyCom
Forums: Swiss IT Sourcing Forum, Swiss Business Process Management Forum, Swiss
Information Management Forum
©Copyright uvision Ltd 2014 – Zurich, Switzerland. All rights reserved.
For further information please contact:
InsuranceCom Asia Michael Schaefer lic. oec. publ. Senior Business Manager
uvision Ltd Nordstrasse 9 8006 Zurich Switzerland
+41 44 260 10 60 michael.schaefer@uvision.ch www.insurancecom.asia, www.uvision.ch
Premium PartnersDebevoise & PlimptonEYSunGard Swiss Reinsurance Company Ltd The Boston Consulting Group
PartnersCognizantPactera Technology International Ltd.Samsung Electronics H.K. Company, LimitedSolution Providers
Global PartnerCLS Communication HK Limited St. Gallen Institute of Managemt in Asia Swiss International Air Lines
Organizer: www.insurancecom.asiawww.uvision.ch
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