Huddart bringing world of experience to life
HKFI chief vows to crack down on unscrupulous agents
He may dream of lounging on an Australian beach but 2008 is going to be busy year for Michael Huddart, chairman of the Hong Kong Federation of Insurers.
Volatile stock markets, the government's planned medical reforms and an insurance price war are set to be big issues for the 51-year-old British-born executive, who heads Manulife International in Hong Kong.
With consumer complaints against the industry growing, Mr Huddart has vowed to crack down on unscrupulous agents, 'ambulance chasers' who prey on injured people and illegal underground sales of policies to mainlanders.
A father of two adopted children, he also has strong views on the recent controversy of the Hong Kong based-European diplomatic couple who decided to give up the Korean girl they adopted seven years ago, saying he was 'outraged'.
He and his wife adopted two Indonesian children, Robert and Sarinah, who are now young adults. Having lived and worked around the world, Mr Huddart is now an Australian citizen.
What is the outlook for the insurance sector this year?
The stock market is full of uncertainties but the fundamentals of the Hong Kong economy still look good. The Beijing Olympics in August will support both the Hong Kong and mainland economies and this will help life and general insurance growth.
How did the life and general insurance sectors perform last year?
For the first nine months of 2007, general insurance premiums grew about 4.3 per cent but underwriting profit was down from HK$2 billion to HK$1.7 billion. This was mainly because of deteriorating claims experiences and a price war in motor insurance. General insurance has always been competitive as we have 116 general insurance and 18 composite insurers which conduct both life and general insurance business.
The life insurance sector has benefited from the stock market, with investment-linked policies recording premium growth of 40 per cent year-on-year, while non-investment-linked policies were down more than 4 per cent in the first three quarters.
Are you worried that policyholders are focusing too much on investment returns and not paying enough attention to the protection value of their policies?
The industry always tells sales agents not to forget the protection needs of customers. A key role for insurance is to provide 'rain money' for a family when the policyholder dies or to provide money for medical treatment when someone is suffering from a critical illness. Only when these protection needs are met should policyholders use insurance to manage their wealth.
There have been complaints that some insurance agents are misleading clients about investment returns or provisions in their policies. What will the HKFI do to help crack down on such malpractices?
We have already done a lot in insurance policies to explain what plan people are buying, setting out what is a guaranteed return and what is not. If insurance agents have been misleading clients, they face disciplinary action from their company and the agent's registration body.
The HKFI received about 37 complaints about investment linked products last year, up from 10 in 2006 and that was probably related to the growing popularity of such policies.
There have also been reports that some Hong Kong insurance agents were selling 'underground' policies on the mainland, which is illegal. Has this problem been solved?
This was a problem before but the HKFI has strongly discouraged Hong Kong agents selling in the mainland and the situation is under control.
About 5 per cent of new insurance business in Hong Kong is sold to mainlanders when they travel to Hong Kong, which is legal. The insurance companies require these policyholders to show their travel documents to make sure that they are buying the policies when they are in Hong Kong.
What are the five major business opportunities for the local insurance sector over the next few years?
1) Medical reform, which may involve the insurance sector; 2) pension reform with a proposal for employees, instead of their bosses, to choose their MPF providers; 3) consolidation of some of the 116 general insurance companies; 4) baby boomers reaching retirement age; 5) strong economic growth in Hong Kong and the mainland.
What are the five major challenges for the industry?
1) Investment-linked products that rely too much on the strong stock market and may be affected by volatility; 2) increased regulatory burdens such as ever tightening anti-money laundering laws worldwide; 3) the ambulance chasers, who are quasi lawyers called 'recovery agents' that offer to help people who have had an accident claim workers compensation, but take a huge cut from any proceeds they get; 4) employers who do not give the exact headcount of their employees when buying compensation plans; 5) a potential price war in the MPF sector and the ongoing price war in the motor insurance sector.
Do you support the proposal to spin off the Insurance Authority as a semi-government body like the Securities and Futures Commission?
The HKFI supports it but we do not want it to become a huge bureaucracy, resulting in a huge increase in insurance license fees which would be passed on to customers.
Why did you join the insurance industry?
I like doing this job - when a policyholder dies, I can hand the money over to the widow or widower. They have lost their loved ones but at least they have the money to rely on.
I have worked in seven countries including Hong Kong. I started my career in England and then worked in Australia at a company called CMG. Then one day I was attracted by an advertisement looking for someone in Indonesia so I applied for the job and joined Manulife Indonesia 12 years ago.
You adopted two children in Indonesia. Was it difficult to raise children from a different culture?
My wife and I have a happy marriage but we could not have children although we wanted them so much. We adopted Robert and Sarinah when they were less than two and they are now they are 20 and 19 respectively.
I do not think cross cultural adoption is a problem. Being parents is a challenging job but it is the same for every parent.
What do you think about the news that a Hong Kong-based diplomatic couple has given up a Korean girl after seven years as her parents?
Both my wife and I were very upset about the news. We both think that when you adopt very young children they become part of your culture and they are completely your own children. We never thought about Robert and Sarinah as anything but our children. While we, like all parents, would get upset with our kids from time to time, we like all true parents are parents for a lifetime.
As any true parents would tell you, it is not who gives birth to a child that is most important; it is who brings up that child. After the adoption, the Korean girl is the child of the diplomatic couple, and just like genuine parents. We are outraged that any parent can surrender their child to any social services.
Do you want your children to join the insurance industry?
It would be up to them. If they choose insurance, I would be proud but I would let them follow their hearts.
Among the many cities and countries where you have worked and lived, which one do you like the most?
Hong Kong is a great place to live and work while Australia is a good place to retire and relax. My birth place England is too cold and wet.
How many insurance policies do you personally own?
I have five polices and if I die my family will have full protection. This includes a policy which provides for regular savings and offers good returns.
I wish I could have started saving much earlier. I started at about 40 but it would have been better do it earlier. I would have saved up more and maybe had a better retirement.
What will you be doing in 10 years' time?
Hopefully I can retire to the beach in Australia.