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SCMP Reporter

THE life insurance sector is recording significant growth in the market with high returns on investments and a more personal approach to dealing with clients.

  Earlier superstitions concerning the industry have been glossed over by the need to make money due to changing social and economic conditions.

  There are now more than 14,000 approved retirement schemes available in Hong Kong with an estimated 25 per cent of the population covered in one or another.

   The 20 per cent growth in new premiums experienced by the the life insurance sector last year is a trend expected tocontinuefor some time, according to insurers.

   To stay ahead of the game and to keep up with increasingly sophisticated consumer demands, underwriters are diversifying their product portfolios and paying closer attention to true consumer needs and whims.

   HSBC Life, for instance, plans to begin marketing unit trusts for investors who are comfortable with a degree of risk for the sake of potentially lucrative rewards.

  Although such vehicles do not fall under the traditional life insurance umbrella, more of them they are likely to be increasingly available as back-up to those that do.

   HSBC Life, a subsidiary of the Hongkong and Shanghai Banking Corporation, also offers a range of other schemes.

  ''We have life insurance products which can be used against mortgages, products that are simply for retirement, products that have retirement savings elements in them and pure savings policies which have no element of life insurance whatsoever,'' said Robert Duggins, the company's chief executive.

  ''Far and away the most popular form of savings in Hong Kong, however, is a life insurance retirement fund combination policy which, in the event of the insured's death, will go towards whatever he was trying to achieve. That might be school fees for children or the support of the spouse and other beneficiaries.

  ''There are sophisticated investors who separate the need for savings and life insurance. On one hand, they are looking for a term insurance policy to specifically fit the life insurance requirement they have.

  ''On the other, they are looking for a separate savings vehicle. We provide a cross-section of schemes to cover the whole spectrum,'' Mr Duggins said.

   Single endowment and other individually designed schemes with a range of riders have gained in popularity, mainly due to convenience of use and flexibility.

   Mr Duggins attributed the growth of the territory's life insurance market to three factors.

  First, was the increasing per capita wealth of the population, now on a par with industrialised countries.

   Second, was the breakdown in the family unit and the financial support it gave.

   Third, was the increased cost of living.

  ''In the latter case, people are seeing the need increasingly to put money aside for retirement - money that perhaps they would not have needed 15 years ago when the cost of living was much lower,'' said Mr Duggins.

   With bank deposit rates at between one and two per cent on local currency accounts, the attraction of savings schemes that conservatively guarantee between five and eight per cent returns, but with the potential to perform far better than that, was significant.

  While there was no set profile encapsulating the typical life product investor in the territory, most were between the ages of 21 and 45, with average monthly incomes of between US$1,300 and US$3,900.



Life sector to sustain growth