In the past year, regulators and industry players have been kicking up about how general insurance premiums have been affected by intense price competition between providers. In the most severe cases, some insurers were said to have suffered 40 per cent losses in annual premiums. Judging from what we have seen lately, the trend is showing no signs of abating. One of the most competitive sectors is travel insurance. While HSBC Life, one of Hong Kong's largest life insurers, has long held an edge in the travel market - largely due to its strong customer base and a well-run website - others are putting in a lot of effort to catch up. It is travel insurance's inherent simplicity compared with other products which accounts for its popularity among insurers. First, it costs little to sell - 35 per cent of HSBC's travel insurance customers bought policies through the internet, while a further 10 per cent conducted the transaction by telephone. Second, travel insurance has benefited from free marketing and promotion after large-scale tragedies, such as the Sars outbreak two years ago and last year's tsunami. In other words, travellers are becoming increasingly aware of the need for protection and with the pie growing bigger, insurers are, naturally, eager for a slice of it. Several insurance companies have introduced price reductions on their travel insurance policies over the past few months. One of the most interesting ones is from Swiss-based Zurich Insurance, which last week announced it was teaming up with online travel retailer Priceline to offer 25 per cent off travel insurance bought through the latter's website. Zurich's policy covers terrorism and includes $1 million worth of medical care, as well as the basic coverage provided by most travel insurance packages. The premiums for a one-week trip outside China cost $195 per individual and $390 per family. Not to be outdone, Dah Sing Life - the life insurance arm of Dah Sing Bank - launched an aggressive campaign last month to promote its life insurance. They are offering free travel insurance to customers who buy their policies. HSBC guarantees renewal HSBC this week announced new offers for other general insurance products. Two new medical insurance plans with life-time guaranteed renewal and no medical check-up requirement are being offered to all customers under the age of 60. The plans, whose prices range from $1,344 to $2,640 annually, depending on the amount of coverage, will also cover consultations with specialists and Chinese medical practitioners. dragon note has downside As retail investors gain more knowledge about equity-linked notes - thanks to investor education campaigns promoted by banks and fund houses - more providers are switching their attention to these instruments that are the basis of most guaranteed funds. Last week, Belgian-based KBC Financial Products launched its new KBC Dragon high-yield notes series - a two-year-term instrument that offers three fixed coupons of 4.1 per cent (for US dollars) or 3.7 per cent (for Hong Kong dollars). On top of the fixed coupons, investors can also earn potential returns based on the performance of the six underlying stocks - Cheung Kong (Holdings), Hutchison Whampoa, Sun Hung Kai Properties, China Petroleum & Chemical Corp, Ping An Insurance (Group) and China Life Insurance. The mechanism is simple. At the end of the term, if the share price of each of the six stocks stays at or above its reference price, set at 92 per cent of the initial spot price, investors will obtain an extra 1 per cent return. The potential upside is by no means street-beating: 18.3 per cent for US dollars and 17.1 per cent for Hong Kong dollars, compared with an average of more than 20 per cent for most other equity-linked notes. However, the firm's associate director, Kathy Li, said investors would benefit from the more 'defence-oriented' mechanism of the notes, which are not likely to fall below their reference point unless there is a major financial event. Just how strong this defensive mechanism is will have to be judged by investors themselves. If the closing price of any share in the fund is below its reference price at the end of the two-year term, investors will see the capital originally invested reduced by a proportional amount, paid out in either shares in that stock or the cash equivalent.