The formation of BEA Life in January this year was, in the view of managing director Patrick Wan Chi-tak, a logical necessity. Official statistics tracking the performance of the local insurance sector had shone a spotlight on the most significant market trends and, in doing so, left little doubt about the direction to take.
Specifically, the data compiled for 2006 by the Office of the Commissioner of Insurance confirmed that the life insurance sector in Hong Kong had seen consistently good growth over the previous 10 years. It had outstripped the rate of expansion in the general insurance sector, which, on average, had seen only single-digit increases.
In addition, the numbers revealed that the portion of premiums coming from investment-linked products was steadily expanding and that, in 2006 alone, the source of around 30 per cent of overall new business had been bancassurance. Essentially, this is the practice of banks marketing their own in-house insurance products to clients rather than distributing policies issued by third-party providers - mostly the major established international insurers.
For the BEA Group, the way forward was clear. They decided that subsidiary Blue Cross (Asia Pacific) Insurance, of which Mr Wan is also managing director, would continue to offer general insurance, specialising in travel and medical cover. But a separate entity would be set up to focus on life products. The stated objective was to reflect market trends, while also finding ways to capitalise on potential synergies in distribution, underwriting and back-office functions.
'The main reason for setting up BEA Life was to strengthen the group's wealth management services,' Mr Wan said. 'More and more people want a one-stop service to do banking, investments and take out insurance.' He added that the initial strategy was not only to focus on short to medium-term insurance savings products, but to ensure there was a 'comprehensive product suite' of investment-linked, whole-of-life and term options.
Already, 13 distinct choices were available, geared to different client requirements. Others would be introduced progressively in response to changing customer demand or prevailing market conditions.
Mr Wan emphasised that BEA Life was liable for death benefits and all other benefits arising, and the company was responsible for overseeing the performance of all investments. He also believed that the bank's more than 130 local branches and 'Supreme Gold' centres would give customers an easy point of access, and felt confident the new venture would create a broader range of career opportunities.