Banks muscling in on the life market

It started perhaps 30 years ago as a trickle. Banks such as Hang Seng pioneered a small and inconsequential niche in insurance for themselves, taking advantage of legislation here that permitted them to operate an insurance arm.

But in the past 10 years or so, the floodgates have opened and the banks, ever-hungry for new sources of income, have aggressively taken on the established insurance sector for their share of the market.

According to Insurance Institute of Hong Kong president Andrew Chow, in the mid-1990s, the bank insurance model truly began to muscle in, and since then the competition has been intense. Now, it's the insurance companies who are searching for the niche markets.

'Bank insurers are being recognised by the traditional companies as keen competitors, especially in the personal market,' he said. 'Insurance companies, agents and brokers still have room to grow, as usually the banks are pursuing their own customer base, but this too will change. The bank insurance model is the provision of insurance and other bank products in an all-round package, and in that sense it is distributed through their branches or through telemarketing.

'These bases cannot normally handle more complicated commercial business or spend hours tailor making a plan for this sort of customer. There are notable exceptions, but most banks are focusing on their own customers.

'There are also good examples in Hong Kong of insurance companies co-operating with banks and providing their services to banks who do not operate their own companies.'