Asia Financial chair Chan reflects on 26 years of the EAIC

Technology, geopolitics and demographics are some of the biggest challenges to Asia’s insurance sector, according to one of Hong Kong’s most prominent business people.

Bernard Charnwut Chan, chairman and president of Asia Financial Holdings, speaking at the East Asian Insurance Congress (EAIC) in Hong Kong this week, said the industry had undergone massive changes in the 26 years he had been associated with EAIC.

In a wide-ranging thought leadership address, Chan examined some of the pivotal events of recent years and their impact on the insurance industry and other sectors.

He said that looking at photographs of his first EAIC—as a Hong Kong deputy chief delegate in Macau in 1998—had reminded him of the impact of technology.

“The photos were taken by cameras, not smartphones,” Chan said. “Today’s technology is a lot better.”

He cited the 9/11 2001 terrorist attacks on the US as another landmark in insurance, with the rise of terrorism coverage.

Healthcare is a big focus for Asia Financial Holdings—it holds a stake in Bangkok’s Bumrungrad International Hospital—and Chan recalled in his speech the disruption caused by the severe acute respiratory syndrome (SARS) epidemic that struck Asia in 2003.

SARS killed at least 299 people in Hong Kong alone. “The epicentre was in the hospitals,” he said. “Nurses and doctors were dying.”

None of the private hospitals could find insurance protection, he recalled. “No insurer was willing to insure them, but we could not let private hospitals shut down.”

The solution, he recalled, was that no SARS patients were admitted to many private hospitals. “It wasn’t a great way to handle it, but it was a completely market decision,” Chan said.

The COVID-19 pandemic was received differently, Chan said, saying it accelerated technological and social changes.

Climate and aging

Another significant external influence on the insurance industry over the past 25 years has been geopolitics, Chan noted. “We are clearly in a different time. Tensions are huge,” he said.

Those differences have manifested in Hong Kong over the past two decades, he added. “Hong Kong, for the past 20 or 30 years, has served a gateway for capital going into China,” he said, but that dynamic has now changed. The city’s major role nowadays, he argued, is to guide Chinese companies with de-risking, as they expand into Asia and the wider world. This dynamic of helping Chinese companies de-risk is here to stay for the next 10 to 20 years, he said.

“Demographic change represents another major issue for insurers.”

Chan noted that for insurers, climate-related occurrences that were once considered one in 200-year events were becoming one in 50-year events, or even more frequent. “Climate change is real,” he said. 

Chan said that in 1998 the idea of true sustainability seemed “remote”. While this is changing, he warned, consumers were still not prepared for having the costs of renewable energy and other sustainable developments passed on to them. “That dialogue hasn’t started.”

Demographic change represents another major issue for insurers, he said, citing the relatively rapidly aging populations of Hong Kong, Japan and Thailand. He noted that a specific field of technology—gerontechnology, which encourages and promotes technological innovations in products and services that address older peoples’ ambitions and needs—had emerged to address the problems created by aging.

Chan advised the insurance industry to look not just at its own evolution, but that of other sectors. “Cross-collaboration is a must,” he concluded

For more news from the East Asian Insurance Congress conference (EAIC) click here.

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