A new internet-based general insurer yesterday entered the Hong Kong market even as many players opt to leave it.
DirectAsia.com sells motor and travel insurance through the net instead of banks and agents. Its move is in sharp contrast to its peers in Hong Kong who see the market as too competitive and crowded.
HSBC, which used to be the largest general insurer in the city, this month sold its general insurance business to French insurer AXA.
The number of general insurance companies in Hong Kong is down to 97, compared with 142 in 2000, according to the Office of the Commissioner of Insurance.
Simon Birch, chief executive of DirectAsia.com's holding company Direct Asia Insurance (Holdings), said that selling through the web, its products would be 20 to 30 per cent cheaper than other players' because it did not need to pay commissions to agents or brokers.
'Hong Kong's traditional general insurance business is too crowded, but not the direct insurance market,' he said.
Birch said his company started operations in Singapore in 2010 and had achieved a market share of 3.5 per cent in motor insurance in 20 months. He hoped the company could repeat that in Hong Kong, adding that the insurer planned to expand to Thailand and Taiwan.
Motor insurance is traditionally priced according to the quality of the car, but Birch said that for self-driven cars, his firm would price based on the credentials of the person driving it, making it cheaper for drivers over 30 with a clean driving record.
Charles Burgess, Asia-Pacific managing director of Whittington Group, which owns Direct Asia Insurance, said 65 per cent of British and 90 per cent of Australian policyholders bought simple insurance products online. In the United States and Europe, the ratio is about 20 per cent. 'Asian customers will catch up with the international trend soon.'
Chan Kin-por, legislator for the insurance sector, said that as many general insurance companies had departed Hong Kong, it was good to see new players coming in.
But he was not sure if online sales would catch on. 'It takes time for Hong Kong customers to accept any new business model. Traditionally, customers like to buy from agents and banks. Time will tell if they would like to switch to the internet.'