AIA eyes next frontier in China, marketing ‘protection’ products among consumers in smaller cities
AIA Group chief executive Ng Keng-hooi says mainland consumers have a growing demand for ‘family first’ products geared towards medical and life insurance
AIA Group will seek to expand to more second and third-tier mainland cities and continue to hire more sales agents in the world’s most populated country, according to its chief executive Ng Keng-hooi.
Ng said the company has been successful in many major cities in China and the next step is to invest in lesser known second and third-tier cities under its expansion plan.
“There are a lot of second and third tier cities in China which have a population between 5 million to 10 million. They have a need for a wide range of insurance products to protect their families,” Ng told the South China Morning Post in an exclusive interview.
The largest insurance company in Hong Kong, and one of the largest in Asia, AIA can trace its origins back to Shanghai in 1919. After exiting the country during the second world war, the insurer made a return in the early 1990s, eventually becoming the only foreign insurer to hold 100 per cent ownership of its office in China.
The company operates in Beijing, Shanghai, Shenzhen, and 14 cities across Guangdong province and nine cities in Jiangsu province.
In recent years, AIA started to expand to smaller cities such as Foshan, Zhaoqing, Wuxi, and Nantong, among others.
China recently announcement that it will remove the cap of 50 per cent ownership on foreign ownership in mainland insurance companies over five years, a move that won praise among overseas industry groups seeking greater access.
“The relaxation shows China is committed to open up its insurance market to foreign companies. This is a good move,” Ng said.
Ng said his focus is to promote protection products from life insurance to medical insurance.
“This is very important. Some people may like to buy short-term savings or investment-linked policies, however, they need to get sufficient protection for their family first,” he said.
AIA in September agreed to pay A$3.8 billion (HK$23.8 billion) to acquire Commonwealth Bank of Australia’s life insurance business in Australia and New Zealand, in a deal that will give it access to 40 per cent of the combined population of the two countries, propelling it to the top of the league tables among life insurers.
Ng said AIA would continue to look for other merger and acquisition opportunities but would focus more on organic growth.
In terms of sales channels, he said the firm would continue to sell through agents and bank partners and has no plan to sell on the internet.
“We have a strong agency team in Hong Kong, China and many Asia markets. In Asia, people still demand face-to-face meetings with agents to explain the products to them,” he said.
“Some people may like to buy simple products online but I do not think they would buy complicated life insurance and medical products via the internet.”