Outbreak may push company to focus on retirement-related business and pursue online channels more vigorously in an era devoid of high-guarantee products
Insurers in Hong Kong are poised to embrace new trends and opportunities in the post-pandemic world as well as in the Guangdong-Hong Kong-Macao Greater Bay Area, Wilson Tang, chief executive of BOC Life, told China Daily on the sideline of the Greater Bay Area Conference - GBA: The Way Forward.
Tang admitted that the COVID-19 pandemic has substantially affected the insurance industry in the city, as it has seen deep falls in new business and new annualized premiums this year compared to 2019.
Wilson Tang
"But I think COVID-19 will only have a short-term impact, in the worst-case scenario that only will affect the industry in one or two years' time, not forever. So for insurers, we should focus on long-term planning," he said, adding that COVID-19 will not have a significant impact on long-term mortality rates, at least not in Hong Kong and the Chinese mainland. The mortality rate, he stressed, is key to the insurance company.
Tang pointed out that since COVID-19, the market awareness of health and the demand for medical and health protection insurance products has been increasing.
"So in the past, the whole market demands heavy-saving insurance products, but since COVID-19, the public is demanding more life insurance products and medical insurance products. Aside from this, COVID-19 also has its impact on face-to-face sales," Tang said.
ALSO READ: Expert sees rosy picture of medical collaborations in Bay Area
He explained that BOC Life is working very hard on the product side to meet new demand, adding that digital sales for the insurance industry will present more opportunities for companies like his.
Up until now, we can achieve more than HK$1 billion (US$129 billion) (in) annualized premiums through online sales. That is a really substantial growth compared to 2019, and we will keep increasing our investment in digital.
Wilson Tang, chief executive of BOC Life
The COVID-19 pandemic may be a trigger point for the insurance company to focus on online channels as well as face-to-face sales and traditional channels.
"Up until now, we can achieve more than HK$1 billion (US$129 billion) (in) annualized premiums through online sales. That is a really substantial growth compared to 2019, and we will keep increasing our investment in digital," Tang said.
Another new trend to get stronger since COVID-19 is the low-interest-rate environment, he said, explaining that it has affected insurance products too.
"So for the high-guarantee (products), that will be gone soon, it will be very hard to find some high-guarantee investment return insurance products, so insurance products will be more longer term with (a) low guarantee."
He said Hong Kong is gradually becoming an aging society, with an average life expectancy of over 87, significantly more than it was 20 or 30 years ago, adding that a longer life expectancy can bring new business opportunities to the life insurer.
"As for the Bay Area, I believe it is crucial that Hong Kong is better integrated into the Bay Area, and BOC Life is looking to explore some opportunities to invest in the retirement-related business, so that we can offer that service to our customers as well."
Tang said that insurers in Hong Kong need to identify future demand and pinpoint what areas they would like to invest in the Greater Bay Area.
READ MORE: HK's first integrated insurance marketplace app launched
"The first thing that Hong Kong insurers have to ask themselves before investing in the Bay Area should be what's your advantage, what can you offer to mainland customers?"
He said that when people are talking about the Bay Area, they always look at finance, high-tech, travel and entertainment, while the retirement-related industries, an important sector, are often overlooked.
"The Bay Area (as a whole) is just like Hong Kong, we are facing the same social issues. If you look at the demographics, you will see that the issue is (an) aging population, which means the demand in the future for retirement will rapidly increase."
He believes that Hong Kong's better integration into the Bay Area can help solve this problem and it is also a business opportunity for the insurance industry.
