Life Insurance in Asia E-Book

Stephan Binder

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Finance Editions
• Sprache: Englisch
• Veröffentlichungsjahr: 2012

Seitenzahl: 403

Beschreibung

An incisive look at the war for market share in the Asian life insurance market Although the life insurance industry in Asia has emerged from the financial crisis stronger than ever, it has not escaped unchanged. As the general focus of insurance companies across the continent moves towards profitability beyond growth, tightening regulatory measures, shifts in consumer preferences, and risk tolerance, battle lines have been drawn between local incumbents, attackers, and foreign players. Life Insurance in Asia: Winning in the Next Decade, Second Edition looks at the ways in which small local agencies and multinational companies alike are seizing control of as much of the market as they can by aggressively recruiting new agents, leveraging new channels, and selling new products to cash in on the explosive Asian markets. Thoroughly revised and updated, this new edition offers a comprehensive introduction to the booming Asian life insurance markets and outlines exactly what it takes to capture the opportunities that are emerging. Drawing on the research and experience of the McKinsey Asia financial services team, it includes everything you need to know about the battle for the life insurance market in Asia. * Looks at how China and India are becoming increasingly important players on the international life insurance scene * Goes behind the scenes of the Asian life insurance industry and the contentious battle for market share * Outlines the steps to successfully entering, and prospering, in the Asian market The life insurance industry in Asia is changing like never before. What the future holds, no one knows, but with Life Insurance in Asia in hand, you'll have a clear idea of the factions in play and the rules of the game.

Leseprobe

Contents

Acknowledgments

Introduction

Chapter 1: Emerging Themes in Asia

A New Paradigm

Asia as the Emerging Powerhouse in Insurance

A Heated Battle between Multinationals and Locals

The Changing Face of Distribution

Driving Innovation in Insurance

Changing Product Mix to New Needs of Asian Consumers

Conclusion

Chapter 2: China

A Winding Road to the Top

Rise of the Chinese Giants

Foreign Multinationals in China: Scaling the Great Wall

Key Challenges to Overcome in China

The Future: Growth in Uncertainty

Chapter 3: India

Dawn of a New Era

Changing Landscape of the Life Insurance Market

Path to Sustainable Growth in the New Normal

The Future: India Life Insurance 2.0

Chapter 4: Japan

Continued Stagnation in the Overall Market

Shifting Competitive Landscape

Emerging Opportunities in Certain Product Submarkets

Increasing Scope for Innovative Sales Models

The Future

Chapter 5: South Korea and Taiwan

Highly Mature Markets

Mismatched Book of Assets and Liabilities

Entrenched Position of Leading Domestic Players

Foreign Players Fighting to Gain Share from Local Incumbents

South Korea: Solid and Resilient

Taiwan: Darkness before Dawn?

Chapter 6: Hong Kong and Singapore

Profitable and High-Growth Contributor

Small but Stable Market for Latecomers

Attractive Asian Base for Multinational Insurers

Hong Kong: The China Opportunity Offshore

Singapore: Structured and Profitable

Chapter 7: Southeast Asia

Increasing Competition between Foreign and Local Players

Tailored Products for Market Niches

Channel Upgrades to Reach More Customer Segments

The Future: Reaching Scale

Indonesia: The Next Growth Frontier

Vietnam: Little China?

Looking Forward: Major Challenges Ahead

Chapter 8: The Road Ahead

Changing Context: A Much More Difficult and Nuanced World

Seven Priorities for Winners

Sustaining Growth in the Next Decade

Appendix

Index

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Acknowledgments

This book is based on our experience as leaders of the insurance practice in Asia at McKinsey & Company, accumulated over more than a decade. We are extremely grateful to our clients, friends in the industry, and our colleagues who have been supporting us on this project. Many people have collaborated with us and we cannot possibly list them all here. However, there are a few that we wish to specially mention because this book could not have been written without them.

In particular, we would like to thank our colleagues who have helped with individual chapters and topics: Parker Shi, Rae Chen, Janet Tang, and Alexander Gräwert for China, Eunjo Kim, and Yongah Kim for South Korea, Tab Bowers, Masaaki Tanaka, and Kiyoshi Miura for Japan, Ramnath Balasubramaniam and Souvik Chakraborty for India, Raoul Oberman, Driek Desmet, Nigel Andrade, Raj Kamal, and Jessica Tan for Southeast Asia, Alex Ng on health insurance, and Joe Chen on innovation and new technologies.

Many of our friends and clients have also given us insights throughout this process. Special thanks go to Peter Ma and Dominic Leung at Ping An, Edmund Tse and Paul Lloyd at AIA, Lennard Yong at ING, Karen Chan at BoAML, Ben Lin at Morgan Stanley, and Mark Wilson.

We would also like to thank our colleagues leading McKinsey’s GIP (Global Insurance Pools) who provided the research and market data on growth and profitability. Special thanks to Gauri Tyagi and her team, and the great platform that Benoit Gerard, Lukas Junker, and others have created for our firm. Our colleagues in our Research and Information centers also helped tremendously, in particular Benxin Yang and Brian Xie.

We also owe a special thank you to Bonnie Fong, who led the work in producing the first complete version of this edition, and Raymond Woo, who has brought this project across the finish line at the end stages.

Last but not least, we would like to thank our families for putting up with us during endless weekend, holiday, and evening hours, glued to our computers and working through this book chapter by chapter. Lemeng and the two girls, Emma and Carla, have been very patient and understanding, while Angela and the Ngai boys—Matthew and Michael—supported the production of this edition as much as the last one, and Angela has even been inspired to join the insurance industry! We could never have done this without their support.

Stephan and Joe

Introduction

The global life insurance industry has faced unprecedented changes over the last few years, in particular the global financial crisis that reduced economic growth and created huge turmoil in capital markets, which in turn impaired assets on the balance sheet at an unprecedented scale. Life insurers all around the world have been dealing with extremely low interest rates, highly volatile capital markets, a flood of new regulations, and a completely changed risk framework.

While Asia has fared fairly well in this environment, it is not immune to the turbulences of the global turmoil. Economic growth is slowing down in Asia, too, although it remains significantly higher relative to Western markets. GDP growth is still forecasted at 7 percent across Asia (excluding Japan) for the next 5 years, compared to 2 percent in the United States and 1 percent in Europe. Interest rates are low in Asia, too, and equity markets have been equally disappointing in performance and highly volatile. Those life insurers with heavy exposure to international capital markets have suffered directly from the collapse of some parts of the market in the West.

Amidst this gloom, fundamental growth drivers remain strong in Asia. In particular, the emergence of a new middle class in Asia, with sufficient income and wealth levels to buy savings and protection products, will be the primary force to propel the industry forward. We forecast that over the 10 years from 2010 to 2020, Asia will contribute more than half of global premium growth, measured by gross written premiums. However, across all the diverse markets in Asia, life insurance companies will face a much more challenging environment to capture these growth opportunities. Beyond the macroeconomic challenges of low interest rates and volatile capital markets, the industry is facing some structural challenges: Regulators are tightening their scrutiny on industry practices across the region and investment products, key growth drivers of the last decade, are increasingly falling out of favor with consumers due to disappointing returns. At the same time, the bancassurance channel that has driven much of the growth in the past is proving much less profitable than captive channels, and agency—the bedrock of the life insurance industry—is reaching a tipping point where the product-push approach and mass recruiting are no longer sustainable. In fact, the number of life insurance agents has started to shrink for the first time in some key markets in Asia.

Against this backdrop, life insurers will have to change their mindset and shift from a strong growth focus, mainly looking at the top-line and premium rankings, to a more value-oriented approach. This is a new paradigm for the industry and will require significant changes in how the life players operate. They will have to revisit their distribution models, explore potential opportunities from new technologies and innovation, revamp their investment management functions to address challenges in the more volatile market environment, and adjust their product portfolios to cater to specific customer segments and maintain a strong value perspective.

We remain very positive on the outlook of the life insurance industry in Asia. The coming years will witness the development of some strong Asian champions that play in the regional, if not global, league alongside some multinational companies (MNCs) that will remain powerhouses across the region. We also predict that competition will intensify and that many more companies will be forced to exit or consolidate as they do not successfully adapt to the new reality in the industry.

WHAT IS NEW IN THIS SECOND EDITION?

This latest edition is based on the success of our first book Life Insurance in Asia: Winning in the Next Decade, published in early 2009. Even though it has been only three years, we felt it was time for a full revision rather than just a reprint. The life insurance industry has gone through quite dramatic changes over the last three years, and when we wrote the first edition we could not anticipate the scale and impact of the global financial crisis, which is still affecting much of the industry today.

We started this project with the idea of a focused revision, mainly updating market numbers and key changes in the industry (such as regulatory changes). However, the more we progressed in our research, the clearer it became how much the industry has really developed since 2008. In the end, we completely updated this second edition to provide a fresh look at the industry and how it may develop over the next several years.

As with the first edition, this book is written by practitioners for practitioners. As leaders of the Insurance Practice Asia-Pacific at McKinsey & Company, we draw on our many years of experience working with leading life insurance companies in the region, as well as that of our colleagues and clients who have generously contributed to this edition.

This book provides a holistic perspective on industry trends and outlook for executives in the life insurance industry in Asia today as well as those who are looking to enter specific markets in Asia. Investors, analysts, and journalists should also enjoy this edition, which gives a broad perspective on the inner workings of the industry and key challenges for market players. We also believe it supplies a good basis for further studies by academics and scholars who have research interests in this topic.

We do not aspire to cover every detail in every market. This is not intended to provide comprehensive, country-by-country market research (there are many, more timely sources for such market data). Rather, we are sharing a perspective on the industry across the region and our deep dives into specific markets are intended to show the differences and nuances, rather than aiming at completeness.

We look forward to receiving feedback and comments, and similar to last time, we anticipate rich discussion and debate, as well as the occasional word of encouragement from our readers.

Chapter 1

Emerging Themes in Asia

Joining an insurance company in the 1960s in Hong Kong was not an obvious choice. In fact, the industry was poorly understood, and only a few multinationals were active in the market at the time. Insurance agents had a difficult time explaining to customers what the product was about, and many viewed such agents with suspicion. It was in such an environment that Dominic Leung joined the American International Assurance Company (AIA) in Hong Kong as an IT analyst. He remembered that “AIA was essentially run by locals—besides a few expats from the U.S., most of the management team consisted of Hong Kong executives.” Over the years, the industry blossomed, as life insurance became one of the first financial products that most middle-class people purchased. As AIA expanded its presence across Asia, Dominic moved to Taiwan in 1989 to become the country head. There, AIA was known by its Chinese name, Nan Shan, (a company AIA acquired some years before). Over the years, many multinational insurers followed the lead of AIA in entering Asia, including Allianz, AXA, Manulife, Prudential UK, and ING. By the mid-1990s, as more multinational companies aggressively entered the Asian markets, Dominic was headhunted away to be the CEO of Prudential UK’s Greater China operations, overseeing the three markets of China, Hong Kong, and Taiwan.

In January 2004, Dominic made his latest career move. He moved to Ping An, the fast-growing, second-largest life insurer in China, and became the chairman of its life insurance subsidiary (which contributed the vast majority of the value of the group). In 2006, he took over responsibility for all of Ping An’s insurance activities, including life, property and casualty, pensions, and health insurance. Then in June 2010, Dominic retired from his formal role and became the company’s principal advisor. During his tenure, Ping An grew from $7.1 billion in life insurance premiums in 2003 to $17.6 billion by 2011. The company went public in 2004 and boasted a market capitalization of $47 billion at the end of 2011, making it the second-largest life insurer in the world. As he reflected on his career move in Ping An’s internal newsletter in 2004, “I wanted to use my 30-plus years in the insurance industry to contribute to the development of the mainland China market. This is an once-in-a-lifetime opportunity.”