bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Enoch Yiu

The insurance regulator and the banking watchdog unite in governing the growing trend of bancassurance

The Insurance Authority and Hong Kong Monetary Authority (HKMA) will sign a memorandum of understanding (MOU) soon to regulate banks' insurance business.

Insurance Commissioner Benjamin Tang Kwok-bun told the South China Morning Post the MOU was needed as banks had been expanding their insurance operations in recent years.

'It is difficult to think of any retail banks which are not involved in selling insurance business nowadays. Bancassurance is definitely becoming a trend in Hong Kong,' Mr Tang said.

'The regulators should also catch up with this trend. It is a must for the insurance regulator to work with the banking watchdog to regulate banks' insurance sales.'

Mr Tang said about 15,470 bank staff were among 46,120 insurance salespersons registered with the authority in Hong Kong.

Some banks are selling products for other insurers. DBS Dao Heng is selling Aviva's products, while Standard Chartered Bank is selling products for Prudential.

Some are also setting up their own subsidiaries to underwrite risks. These include HSBC and its subsidiary Hang Seng Bank, Bank of China Group, Bank of East Asia and Dah Sing Bank.

Hong Kong Life was set up two years ago by a consortium of six smaller local banks including Asia Commercial Bank, Chekiang First Bank, Liu Chong Hing Bank, Shanghai Commercial Bank, Wing Hang Bank and Wing Lung Bank.

After the MOU was signed, Mr Tang said the HKMA would be responsible for the daily regulation of banks' insurance business.

In cases of complaints of malpractice, the two regulators would share investigative work and take disciplinary action as needed. The Insurance Authority would take action on insurance sales staff and banks' insurance subsidiaries while the HKMA would take actions on banks, Mr Tang said.

Henry Wu King-cheong, legislator for the financial sector, said sharing regulation between the HKMA and the Insurance Authority might not be an ideal solution.

'It is like the HKMA and the Securities and Futures Commission sharing regulation of the brokerage industry,' Mr Wu said.

'It could create unfair competition as the two regulators might apply different standards. The Insurance Authority should take charge of all bancassurance regulation.'

Democratic Party economic affair spokesman Sin Chung-kai said the MOU should be  the first step in tightening banks' wealth management business.

'Banks are no longer just for people to deposit and withdraw money, they are selling securities, funds, insurance and pension plans,' Mr Sin said.

'While banks have changed their operating model to achieve more fee income, our laws and regulations have not yet matched these changes. The government should think of how to regulate banks' expanded business.'

The most recently available figures from the Insurance Authority - for 2001 - showed the top 10 industry players were nearly all insurers. They included the biggest player American International Assurance, with a 20 per cent market share, followed by CMI (12.8 per cent), AXA (9.5 per cent), Manulife International (8.9 per cent), Prudential (7.9 per cent) and Eagle Star (3.9 per cent).

Among the banks, BOC Group Life was highest ranked  in seventh place with a share of 3.6 per cent, followed by Hang Seng Life (2.8 per cent)  in ninth place. Pacific Century Insurance (3.4 per cent) and Royal & Sun Alliance (2.7 per cent)  completed the top 10.

While insurers might still be ahead in total market share, they are feeling the pressure from competition for new business, with banks such as HSBC and Hang Seng Bank tripling sales in the past five years.

Mr Tang, however, said insurance companies  could still compete with banks as their agents were more flexible than bank staff, being able to meet clients  in the evenings or at weekends.

Also, many agents had served their clients for many years, while bank staff might be shifted to other departments or promoted to do other jobs, he said.

RISKY BUSINESS

About 15,470 bank staff are among 46,120 insurance salespersons registered in Hong Kong

Some banks are selling products for other insurance companies

Banks, such as HSBC, are setting up their own subsidiaries to underwrite risks

HSBC has tripled insurance sales in the past five years



Bancassurance faces stricter control