Exclusive | Hong Kong’s digital insurance lags behind Singapore and Western peers over reliance on 120,000 sales agents, study shows
- A Sia Partners study ranks Hong Kong’s digital insurance platforms low on online advisory, quoting prices and handling sales and claims
- Most of the city’s 164 insurers still rely heavily on sales agents, but digital insurer Bowtie ranks No 2 in the world
Hong Kong lags behind Singapore and Western peers in online insurance, as most of the city’s 164 insurers still rely on their 120,000 agents to push sales, according to a new study.
The report, conducted by French consultancy Sia Partners, assessed the digital platforms of 85 global insurers in seven markets, including 12 in Hong Kong. Each was given a score from 0 to 100 according to the performance of their platforms. The criteria included available information, quoted prices, sales claims and overall user experience.
The report ranked Hong Kong fifth with an average score of 51.1. The top four digital insurance markets were the Netherlands at 62.4, the US at 61.1, Ireland at 61.3, and Singapore at 51.5. Hong Kong ranks ahead of Belgium at 49 and France at 48.2.
Sia gave the South China Morning Post an exclusive preview of the report before its publication later this month.
Hong Kong insurance agents eye mainland Chinese clients as borders reopen
Sia’s report looked at a mix of virtual and traditional insurers in Hong Kong offering life and general insurance products. The companies include the biggest names in the market: AXA, HSBC Life, Bowtie, FWD, AIA, Blue, Prudential, Blue Cross, Manulife, Liberty International, Generali and BOC Life.
One area where Hong Kong’s digital insurance platforms stood out was user experience, as they make it easy for customers to access information through smartphone apps and websites. But the city ranked low in online advisory, quoting prices and handling sales and claims, the study concluded.
“This does address the core problem associated with Hong Kong being a market whose distribution model is largely intermediary-led,” said Arthur Roiret, a senior manager at Sia Partners’ Hong Kong office.
“The Hong Kong market is mainly focused on a life insurance business line with an intermediary-focused business model and customers’ willingness to have a human adviser.”
Roiret noted an inverse relationship between a market’s digital capabilities in client acquisition and its reliance on intermediaries.
“In Western markets, we see that more intermediate markets such as Belgium and France are less successful in terms of digital maturity than the more direct markets in the Netherlands, the US, and Ireland,” he said.
This also explains why Bowtie, a Hong Kong virtual insurer that only sells products online without any agents, ranked second in the world with a score of 79 points, after the Netherlands’ Unive at 80 points. France’s Matmut came in third with 65 points. Sia did not disclose the scores of other Hong Kong insurers.
While most Hong Kong insurers provide information to clients online, some still ask customers for a call with an adviser or follow up by email for simple products, said Sia manager Yousuf Muhammad.
“When getting a quote in few of the Western countries, the customer is often presented with a range of options, as several different insurance providers have a large presence in the online space,” Muhammad said. “Online brokers in these countries allow customers to compare prices and coverage between different providers and make a more informed decision.”
Hong Kong could have even more insurance agents on the way. To tap into returning business from mainland clients since the border reopened in January, Manulife, AIA and Prudential said they would hire a combined 10,000 new agents this year.
Since 2019, Hong Kong has introduced four digital players under a new licensing regime. Without any agents sharing commissions, some of the digital sellers are able to get up to 70 per cent of first-year premiums on policies, or they can price the products lower for customers.
Hong Kong’s more than 160 insurers paid out a total of HK$61 billion (US$7.8 billion) in commissions to the agents or brokers in Hong Kong in 2021, according to Quinlan & Associates data.
“We are seeing a clear global trend of customers conducting research and purchasing insurance independently through digital channels,” said Benjamin Quinlan, CEO and managing partner of Quinlan & Associates, a Hong Kong-based consultancy.
Roiret said the emergence of virtual insurers also adds to pressure on traditional players to improve their digital capabilities. The Covid-19 pandemic was also a catalyst for insurers to invest in digital platforms as more customer shopping activities shifted online.
“The outlook for digital insurance in Hong Kong is positive, as the insurance industry is looking to embrace digital transformation to meet the increased demand for fast and more efficient services,” Roiret said.
