Prudential's mainland staff growing on the double
British insurer plans huge increase in sales agents on mainland as people unsure of welfare reform line up to buy private health insurance
British insurer Prudential plans to double its sales force on the mainland over the next few years because it believes more Chinese are keen to buy their own health insurance amid growing uncertainties about pension reform.
Barry Stowe, Prudential's chief executive officer for Asia, told the South China Morning Post there was scope to double the number of agents in the world's No 2 economy to 30,000 over the next few years.
Stowe joined Prudential, Britain's largest insurer by market capitalisation, in 2006 from American International Group (AIG), a major competitor of the British insurer in Asia, in particular in China.
"The health insurance opportunity in China for the mid-term has enormous room to grow," he said.
"You know Chinese people have a very high savings rate … but what many people don't understand is that Chinese don't have a safety net; so they need to build a safety net, for example, by buying health insurance on their own."
Unlike some welfare states in Europe such as Sweden and Denmark, the public health-care and pension system in China remains underdeveloped.
More recently, Beijing has called on people to delay their retirement, which is now typically at age 60, due partly to the slow and less effective reform of the pension system.
Some analysts say the pension system may not have enough money to cover everyone's retirement over the next few decades as China is becoming a rapidly ageing society.
Stowe, who also sits on the board of directors of Prudential, said many governments in Asia, including Beijing, had already turned to the private sector to work with them to provide a safety net that most of their people could afford.
"This is what is happening right now and this is why our sales are strong in Asia and the whole industry keeps growing," he said.
Prudential's Asia business has become a major contributor to group revenue.
It is now contributing about 50 per cent in terms of sales and 35 per cent in terms of profit.
About 10 years ago its profit contribution to the group was only about 10 per cent, Stowe said.
In early August, the company posted a higher-than-expected 13 per cent rise in its first-half operating profit, mainly driven by strong business performance in Asia.
Even in Hong Kong, a very competitive market for financial products, Prudential recorded a 17 per cent growth.
Asked if Prudential was concerned about the economic slowdown on the mainland, Stowe, who has lived in Hong Kong for more than a decade, replied: "Honestly, I have got a lot of confidence that the Chinese government can very effectively manage its economy.
"For example, for many years there has been a lot of talk about a property bubble that is about to burst but if you look today, I think the government has managed its way through it. I will say, don't underestimate the Chinese way to manage its economy."
He worried more about the West, particularly Europe and to a lesser degree North America.
"You hear bad news every day and that causes people in Europe and North America to delay their decisions [to spend or invest]," Stowe said.