Hong Kong insurance finds growth in China’s developing middle class

HSBC is investing heavily in the Pearl River Delta area, explains Candy Yuen

October 16, 2015

The Hong Kong insurance industry is operating in one of the world’s most challenging yet promising environments. Candy Yuen, CEO of HSBC’s insurance and pensions business in Hong Kong explains where the company is investing, how HSBC is growing its market share, and the four big themes that will affect the Hong Kong insurance sector over the next year.

World Finance: The Hong Kong insurance industry is operating one of the most challenging yet promising environments: with regulatory change, rapidly changing customer expectations, and subdued investment markets all influencing strategy. 

With me know is Candy Yuen from HSBC insurance Hong Kong to discuss. 

World Finance: Well Candy maybe you can start by telling me how has the insurance industry in Hong Kong developed over the past years?

Candy Yuen: Well, the insurance industry in Hong Kong has enjoyed good growth momentum over the past few years; we have been having double digit growth consistently for the past decade or so, especially on the life side.

For example, we just published the first half results and the new business premium grew by 25 percent and the long-term inflow premium grew by 15 percent, so it’s a growing industry.

As for HSBC, we are also enjoying the growth: we’ve been on the top of the market consistently. For example ever since the mandatory provident fund has been launched in 2000, we’ve been the number one in market share and we are also consistently in the top three on the life-side.

World Finance: And with changing customer expectations, how has this impacted products and services?

Candy Yuen: Before I answer your question maybe I’ll share with you the purpose of the HSBC, because I think that will help you to better understand how customer expectations impact our products and services.

The purpose of HSBC is to connect people to opportunities, enable businesses to thrive, economies to prosper, and help our people to achieve their ambitions and goals.

So we place everything about the customers’ needs in the centre of what we do. For example, we spend a lot of investment on doing customer research, understanding the customers’ priorities and preferences.

These kinds of studies give us great insight into what customers care about most, to create the products that actually meet the needs of the customers very well. And they’re very well received and have become our flagship products.

World Finance: How do you adapt your services to clients’ needs?

Candy Yuen: Well, we put the clients’ needs at the centre of everything we do. By asking questions, understanding the individuals’ financial circumstances, before we actually recommend the products for them and what is the required coverage for them. So this is all need-based.

And secondly, we provide our customers a lot of choices. So in this way, the customers can help to choose the way they prefer to interact and do business with us.

We invest a lot in our digital technology and infrastructure, again making it easier, better, and faster to do business with us.

World Finance: What strategies will HSBC adopt to capture the growing trend of digital engagement with regard to insurance sales?

Candy Yuen: Same as in any other medium, customer experience is of utmost importance to the success of any products or services that we offer. So we want to understand our customers and their online behaviour, so that we can deliver the best products, and the most appropriate services and offerings through them.

And we also understand a growing proportion of our customers are appreciating the convenience of buying products online, so we also keep adding new products that could be made available online. We also constantly update the look and feel of our website and mobile apps, so that it keeps improving, and the customers find it easier to navigate, and use our website and mobile apps.

World Finance: It is expected that there will be even closer economic collaboration and co-operation between Hong Kong and Mainland China, so how will this impact the life insurance market in Hong Kong?

Candy Yuen: Since CEPA became effective in 2004, more than 10 years ago now, there have been a number of liberalisation measures that have been introduced which benefit the insurance industry and provide good opportunities.

Earlier this year, our group has already announced that we have a lot of focus on Asia, China and the Pearl River Delta areas: heavily investing to help to capture the growth markets there, and also, to help the emerging affluence of the middle-class – to help them achieve their financial goals. And insurance definitely plays a critical role there.

World Finance: Finally, what trends do you foresee impacting the insurance industry in the coming 12 months?

Candy Yuen: Nowadays, you know, with the fluctuation and high volatility in the equity market, I believe insurance will become increasingly important, as a long-term investment vehicle option. Because I think customers are looking for longer term, more stable returns, and possibly even with some level of guarantee.

And secondly, I think well – even though there is recently a fluctuation in the renminbi currency – I believe, you know, over the medium long-term, I thing renminbi is still increasing demand, so I think policies with renminbi denomination will also be gaining popularity.

Third is regulatory changes. You know, especially in Hong Kong, we will be having an independent insurance authority. Worldwide, the trend on the financial side is, we are moving towards market consistence, economic capital framework, we are also having increasing regulatory requirements on managing counter-risk.

Fourthly, and you know, digital, technological, breakthrough, I think that can be easily be a game changer. And in fact the competition, you know, is becoming very blurred. So I believe it would not be surprising if there will be new players, you know, joining us; with some interesting innovations.

In general, we are take it as positively because, you know, even though that could pose potential challenges but that definitely pose new opportunities for us to better serve our clients.

World Finance: Candy, thank you.

Candy Yuen: My pleasure, thank you Jenny.