Where trust builds lives
Andy Tse Kwok-fai and Johnny Chan Chi-kin, insurance veterans with more than 30 years in the industry, have been true witnesses to and active participants in the ups and downs of the high-flying sector in Hong Kong.
The pair had quit well-paid jobs (more than HK$10,000 monthly was nothing to scoff at in the 1980s) to make their bold move into insurance, betting big on longterm opportunities in the sector.
These days, there is no shortage of headline-making stories in insurance and jawdropping prices of policies. But Tse and Chan were among the trailblazers and, after holding senior positions at insurance giant Manulife (International) Ltd for several years, also established their own insurance company SV Group in 2009.
But back in the 1980s, there was no such hype surrounding the insurance sector. In fact it may be said to have been in the doldrums, with hard-pressed insurance agents slackening their pace, tired of playing the game, recalled Tse.
As waves of mass migrations from Hong Kong reached their climax in the 1990s ahead of the territory’s handover, the local insurance industry really felt the pinch and suffered an extended downturn.
At that time, the business was akin to the Wild West, with no licensing system to regulate agents. Thanks to the launch of the licensing regime in the 1990s, the insurance sector got on a standardized and professional track, with nearly 50 percent of local agents getting university degrees.
In subsequent years, it was the thriving local economy and soaring mainland growth that spelled the beginning of a golden era for the city’s insurance industry.
Hong Kong was building up its brand as a global financial center, a feat that called for an army of financial professionals, including those making a career in insurance. That saw the insurance industry become the bright spot in the job market, embracing new talents with myriad opportunities and hefty salaries.
The long-established industry is a major revenue generator for the city. In the first half of last year, total gross premiums contributed to 16.2 percent of Hong Kong’s gross domestic product (GDP).
The high-profile industry is never short of buzz over the attractive pay on offer. According to Chan, fresh graduates can well expect as much as HK$20,000 monthly wage plus a 15 to 30 percent bonus in the very first year itself. In the second year, the monthly salary will be doubled and normally it takes agents just three to five years to start earning millions annually.
Tse and Chan believe the prospects of Hong Kong’s insurance sector in the coming few years would continue to lie in the insatiable appetite of mainland citizens for insurance policies.
Growth expectations are being fueled by the country’s low rate of insurance penetration, giving providers including Hong Kong-based insurers, room to catch up. Premiums were only 3 percent of Chinese mainland GDP in 2014, compared with 7 percent in the US and 11 percent in Japan, according to Zurich-based global reinsurers Swiss Re.
“The insurance industry in the world’s second-largest economy is brimming with fertile soil. The room for growth is gigantic,” Tse pointed out.
In particular, the nation’s growing demand for asset transfers and medical care resources is believed to be the highlights of areas that Hong Kong insurers could capitalize on, said Chan.
All these exciting opportunities will make insurance an even more highly sought-after and lucrative profession in Hong Kong, as the industry always opens its doors to people from different walks of life, he noted.
Cases in point include a former managing director of a local radio station, who was tired of office politics and turned to SV Group for a brand-new career in insurance, said Tse.
Another involves a former Hong Kong movie star who became an A-list agent for SV Group. A yearning for more diverse career options and for being her own boss saw the woman make a bold move into the insurance industry and she eventually made a name for herself in the market as team leader of nearly 200 staff.
More importantly, Tse believes insurance agents with a mainland background could expect to play a bigger part in the sector, in view of mainland policy holders’ buying spree in Hong Kong.
In the first nine months of 2015, mainlanders spent HK$21.1 billion on insurance policies in Hong Kong, representing 21.7 percent of new premiums.
According to Tse, mainland insurance agents, who make up nearly 10 percent of SV Group’s headcount, contributed almost 40 percent of the total gross premiums so far. As for Manulife, mainland insurance agents generated more than 16 percent of the company’s total gross premiums and 50 percent of awards won by the insurance giant in 2015.
As for the misunderstandings and stereotypes surrounding the profession, such negative impressions are a thing of the past in Hong Kong but a hard fact on the Chinese mainland, said Chan. But he believes the mainland stereotypes will also disappear within the next 10 years, amid remarkable improvements in the professionalism of mainland insurance agents.
But Hong Kong agents need to step up their game. The emergence of postmillennial financial planning in Hong Kong is setting the bar increasingly high for insurance agents and talents with average quality are doomed to be pushed out of game, warned Tse.