Rising cyber risk awareness creates opportunities for insurers

Cyber liability is one of the hottest topics in the Asian insurance market today, Patrick Chan, director and general manager at Hong Kong-based Nova Insurance Consultants, told EAIC Today.

“International insurers are keen to do more business in this area, and the fact that there have been some claims in certain industries means that consumer interest is growing,” he said.

Another top theme is the trend for Chinese insurance companies to acquire insurance companies from outside China.
Meanwhile, newcomers are flooding into an already crowded Hong Kong market.

“That market is very saturated and very competitive; on the general side it’s very tough, with a very thin premium rate, and yet still more insurance companies are coming, as well as more managing general agents, so there is more and more supply,” Chan said.

Life business in Hong Kong continues to grow year on year, with more than a quarter of new life business coming from Chinese customers who treat it a type of asset transfer.

“It seems to be very fashionable among the Chinese. Investment returns are much better, and insurers in Hong Kong can invest in things that Chinese insurers are not allowed to, such as unit trusts and mutual funds. Also, people trust Hong Kong life insurers, and they like to put the money outside China.”

As Chinese companies invest in foreign companies and Lloyd’s syndicates, Chan notes that it is important to come up with an insurance offering that is suited to the Chinese markets.

“Ideally it’s about not copying what you have in London but looking at the market, and at what people need, and tailoring it to local needs.”

Chan sees growth opportunities in lines such as property and liability insurance, but adds that while the appetite is there, the indemnity limit people are buying in Asia and particular in developing countries like China is much lower than that in developed countries.

Regarding the future of the industry in Hong Kong, he sees a looming recruitment crisis, because the people who trained in insurance in the 1980s and 1990s—when more university training was offered for this career—are now approaching retirement.

“Those people are all very senior now, and when they leave there will be difficulties replacing them. Fortunately, the Hong Kong government has now agreed funding for insurance and wealth management education, so hopefully things will improve.”