The RMB insurance market in Hong Kong is best characterised by untapped potential, save for a select few institutions whose understanding of the sector has seen them rise above the rest and capitalise on what lucrative opportunities exist. World Finance spoke to Terry Lo, CEO, BOC Group Life Assurance about the market, and the many ways in which the company has capitalised on the still expanding RMB insurance business.
Tell us about the RMB insurance market and your firm’s role in it
Sales of RMB life insurance policies have more than doubled since 2010, according to the Office of the Commissioner of Insurance (OCI). Hong Kong policyholders spent $1.5bn on RMB life insurance policies last year, up from $52m in 2010, and OCI figures showed that more than 12.5 percent of new policies sold last year were for RMB insurance, up from seven percent in 2010.
The growth momentum in the local RMB insurance market continued in the first quarter of 2014. New business recorded year-on-year growth of 44 percent, reaching $5.5m and accounting for 16 percent of total premiums. As the market’s number one in business volume we were the first to launch a RMB insurance product, the first to roll out RMB universal life insurance product, and the provider of the most extensive range of RMB insurance products, BOCG Life specialises exceeding expectations. In the first quarter of 2014 alone, the company’s market-share in RMB insurance increased to 75 percent, reaffirming its leadership in this sector.
Hong Kong’s economy has gradually glued to that of China, as the majority of living staples and necessities are imported from there
BOCG Life is expanding its RMB business. How is this most noticeable?
At BOCG Life, we recognise the importance of meeting customer demands and creating awareness of our offerings through an effective marketing strategy. That’s why we decided to develop a RMB solution marketing campaign.
The campaign began by capitalising on the knowledge and experience of its bancassurance channel, which covers more than 260 bank branches and serves more than 3.5 million customers under the Bank of China Group. Next, effective profiling of integrated data created a multi-dimensional view of customers’ and prospects’ motivations for buying life insurance.
Hong Kong’s economy has gradually glued to that of China, as the majority of living staples and necessities are imported from there. Many customers plan to spend their retirement in China, and make frequent pleasure and business trips. As a result, and to hedge against inflation and to keep abreast of the currency’s appreciation, customers are keen to preserve and grow their wealth in the RMB currency, and buying a RMB insurance product becomes an integral part of their wealth management.
Can you expand on your insurance products and how they differ from other firms?
Riding on competitive edges in RMB insurance, BOCG Life now enjoys a leading position in the RMB insurance market, both in terms of market share and product diversification. It currently offers 12 RMB insurance products, ranging from whole life, universal life and annuity, through to endowment, medical and health policies, and retirement planning. In 2013 and the first quarter of 2014, one of its best-selling products, the Income Growth Annuity Insurance Plan, accounted for more than 30 percent of new standard premiums in the RMB insurance market.
Drawing on a diverse range of multi-currency product services, BOCG Life’s offerings continue to evolve in parallel with customers’ changing needs. The issue age of most insurance products has been lowered to zero to encourage parents to plan and save for their children’s future. And whether a customer is seeking short-term income protection, annuity income streams for retirement, or a comprehensive package to achieve diverse financial goals, BOCG Life consistently delivers solutions that meet each individual’s needs.
How has this past year been for BOCG Life?
In 2013, BOCG Life delivered another year of stellar results. Total premiums clocked in at $2.3bn, representing year-on-year growth of 51 percent, while new business rose to $80m, up 29 percent from the previous year. Its market ranking climbed from eighth place in 2008 to third in 2013 and to the top place in the first quarter of 2014 in terms of new business, and recorded a profit before taxation of $1.5m in 2013 and total assets of $10.2bn as of December 31 2013.
BOCG Life’s strategic focus on RMB insurance products continued to drive immense business growth in 2013. This momentum was sustained into the first quarter of 2014 when the market share in RMB new standard premium rose from 68 percent in 2013 to 75 percent, which again reinforced the company’s leadership in the market. BOCG Life has been granted a financial strength rating of ‘A’ and an issuer credit rating of ‘A’ by the international rating agency AM Best, in addition to a rating of ‘A2’ by Moody’s Investors Service in recognition of its strong financial position.
What factors have affected your business and to what extent?
Currency appreciation and the possibility of appreciation over the longer term continue to stimulate the demand for RMB insurance policies, giving BOCG Life the opportunity to lead in this market space. One of its best-selling products, the income growth annuity insurance plan, accounted for more than 30 percent of the new standard premium of RMB insurance in the market last year and in the first quarter of 2014.
What key developments has the firm seen in the past year?
Responding to market growth, BOCG Life has diversified its distribution channels aiming to offer all-round, wealth management services. It has developed an agency channel to serve non-bank clients while expanding into the broker channel to target on high net worth clients.
What has been the motivation for these developments?
Our service pledge aims to provide customers with convenient and reliable services. BOCG Life continues to evolve in parallel with customer’s ever-changing needs. With a network of over 260 bank branches and more than three million customers, the company is well positioned to harness customer insight and understand what kind of insurance products people in Hong Kong might need. We’re committed to helping customers with their life protection and financial planning needs, becoming their lifelong partner of choice, and working hard to provide them with best-fit insurance solutions.
How are your customer numbers and what is your current customer strategy?
Currently the types of BOCG Life’s customers range from wealth management and retirement planning, through to life and medical insurance protection. The company has a customer centric culture and is passionate about creating superior experience for them. The sheer range of tailor-made life insurance plans and multiple distribution channels represent only a select few examples of how it puts customer first. BOCG Life is also the first and only insurance company that makes its service pledge public, showing a strong commitment in the service standards delivered by its people.
How is this strategy reflected in your customer service and overall customer satisfaction?
BOCG Life prides itself on maintaining an exceptional service turnaround time in every aspect of its back-office operations. According to a satisfaction survey conducted in 2013, BOCG Life achieved promising results with customer services perceived to be superior to key competitors. More than 55 percent of customers rated its services as very good or good. It also achieved a perfect score on claims, which was significantly higher than the industry benchmark of 70.
How does your firm develop sales across channels at the moment, and how does this benefit the group?
To really be all-inclusive, BOCG Life has expanded into the broker and agency channels that focus on segments like high net worth, mainlander and mobile customers. Not only products but also service models and business support services are specifically designed to help the company acquire, grow and retain customers from different channels.
Another major initiative for BOCG Life this year is the launch of an e-channel platform. It will enable interested buyers from any segment in the community to take out life insurance instantly online, giving them a brand new experience in getting the protection they want.
What is your focus for the coming years and how do you expect your firm to develop?
In the years to come, it is high on BOCG Life’s agenda to maintain a leading position in the market. By enhancing our distribution capability and product offering, we expect to further capitalise on our extensive experience in RMB business as a key differentiator to win more customers.
