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The challenges and demands of homogeneous competition in the market for insurance practitioners

Click: Time:2021-08-06 11:24:45

 In recent years, with the gradual maturity of people's insurance awareness, the negative impact of the early days in China due to blind sales by insurance practitioners has gradually diminished. The fact that the general public has shifted from distrust to gradual acceptance of the concept of insurance is something that the entire insurance industry should be thankful for. As the market continues to change, insurance companies or in order to fight for customer groups, or to increase the amount of capital, while promoting product sales has brought a new round of problems, such as risk control of insurance companies, like last year, the insurance regulator timely called a halt to most of the universal life insurance on the market, is to prevent insurance companies in the issue of capital risk can not do a good job of risk control, too much universal life insurance in the company's business, so that Insurance is detached from the essence of protection and risk hedging.

 

Homogeneous competition is fierce and the risk of the insurance industry has increased

 

As an insurance broker practicing in the Hong Kong insurance industry, Julia Li, executive director of Hong Kong D&C Insurance Consultants Limited, said that too much homogeneous competition in the market has brought challenges to insurance institutions, insurance sales, and even insurance buyers at the same time. Hong Kong insurance itself has the characteristics of lower premiums and more attractive investment returns, plus the combination of Chinese companies and Hong Kong insurance companies in recent years. For example, Jiuding Group acquired the Hong Kong business of Fortis Insurance Company and renamed it FTLife; Yunfeng Financial acquired the business of Vantone in Hong Kong; and Zhong An Online (06060.HK), led by the "three horses", has recently landed in the capital market in Hong Kong. It can be said that the insurance business connection between Hong Kong and China is getting closer and closer.

 

Li Huajing pointed out that many insurance companies in the market now in order to win customers, and constantly lower the bottom line to meet customer demand for product design, the introduction of lower underwriting threshold concessions, etc., this form of "price war" for customers in the short term, of course, is undoubtedly good, but how to win customers at the same time, to do a good job of preventing the risk of the industry as a whole, is another issue to consider.

 

Li also believes that the homogeneous competition in the market will inevitably eliminate a large number of small and medium-sized insurance agencies, and how to survive and stand out in this environment is an urgent problem for insurance agencies to solve.

 

Insurance Broker vs.

 

Insurance intermediaries are called insurance agents and insurance brokers (or "insurance consultants") in Hong Kong. The difference between the two is their representativeness and the regulatory body they belong to.

 

In addition to individual agents, there are also insurance agents, i.e. insurance agents registered in the name of companies, such as banks or travel agencies. Insurance brokers, on the other hand, represent clients, and their main business is to act as a comprehensive platform for insurance companies' products, providing a neutral and objective analysis and comparative opinion for clients, making them allocate to satisfactory products. In terms of regulation, insurance agents are regulated by their insurance companies and the Insurance Agents Registration Board, while insurance brokers are regulated by the Insurance Industry Supervision or the relevant insurance brokerage bodies.

 

The Insurance Regulatory Authority (IRA) has been regulating insurance companies since June 26 this year, replacing the Office of the Superintendent of Insurance, which is a government department. According to statistics, as of June 30, 2017, there were 159 authorized insurers in Hong Kong (93 general business insurers, 47 life insurers, and 19 general insurers). Of these insurers, 88 are incorporated in Hong Kong and the rest are from 22 different countries and regions. In addition, there are 761 authorized insurance brokers and 8,939 registered business representatives in Hong Kong. As for insurance agents, there were 65,613 appointed insurance agents (2,447 insurance agents and 63,166 personal representatives) and 26,228 business representatives.

 

Improving the quality of practice in response to changes and adjustments

 

The amendments to the Insurance Companies Ordinance and the new insurance regulatory framework will place heavier responsibilities on insurers in terms of compliance and management, particularly with regard to corporate governance and propriety requirements for authorized institutions and personnel. Broadly speaking, these reforms will be a positive development for the insurance industry as a whole, and ultimately for policyholders.

 

Under the Common Reporting Standard (CRS), all financial institutions in Hong Kong, including insurance companies, will be required to conduct due diligence on all customers from 1 January 2017, and relevant account holders will be required to provide self-certification of their tax residency. In this regard, insurance practitioners will need to know the implications of the implementation of the new rules and the impact on their clients. Others, for high net worth family estate planning, require knowledge of the various regional estate acts.

 

Another example is that before 2015, most of the mainland clients went to Hong Kong to buy investment-linked insurance, which is essentially an insurance-packaged investment in an offshore public fund. In the past two years, the market has changed and insurance has gradually returned to its protection essence, while some practitioners have not paid enough attention to the investment area, resulting in losses in consumers' investments.

 

According to Julia Li, to cope with the development and changes in the insurance industry and the increasingly competitive challenges, insurance practitioners should hold themselves to a higher standard to bring satisfactory services and good financial experiences to customers. These include: insisting on achieving a full understanding of customers' financial needs; continuously learning relevant financial knowledge to improve oneself; maintaining sensitivity to the market and understanding the general trends of the insurance industry and new changes in insurance products; attaching importance to after-sales customer service; and adhering to professional ethics.

 

With the introduction of artificial intelligence and big data, the future insurance industry will be a field full of challenges and opportunities at the same time.

 

About | Money Weekly 

Money Weekly is the most widely circulated and influential practical personal investment and financial management magazine in China. Its slogan "If you don't manage your money, it won't care about you" is deeply rooted in people's hearts. The magazine mainly covers stocks, funds, insurance, loans, real estate investment, collection, entrepreneurship, as well as analysis of various economic trends and financial planning methods.

 

 


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