Hong Kong Trails Behind Singapore in Digital Insurance

Hong Kong Trails Behind Singapore in Digital Insurance

by February 17, 2023

Hong Kong is being overshadowed by Western countries and Singapore in online insurance, a lag that can be partly explained by the Hong Kong insurance industry’s heavy reliance on physical agents, a new report by French consultancy Sia Partners says.

The report, draws on a study of digital platforms of 85 global insurers in seven markets. It gives each of these platforms a score between 0 and 100 based on criteria including information availability, quoted prices, sales claims, and overall user experience.

With an average score of 51.1, Hong Kong ranked fifth, behind the Netherlands (62.4), Ireland (61.3), the US (61.1) and Singapore (51.5). The city, however, ranked ahead of Belgium (49) and France (48.2).

In Hong Kong, 12 insurers were assessed, including some of the industry’s biggest names like AXA, HSBC Life, Bowtie, FWD, AIA, Prudential, Manulife and Generali.

Overall, Hong Kong’s digital insurance platforms ranked high in user experience, recognized by the consultancy for making it easy for customers to access information through smartphone apps and website. They, however, performed underwhelmingly in online advisory, quoting prices and handling sales and claims, the report says.

Sia Partners manager Yousuf Muhammad told the media that while most insurers in Hong Kong provide information to clients online, some still ask customers for a call or follow up by email for simple queries.

Arthur Roiret, a senior manager at Sia Partners’ Hong Kong office, noted that the results aren’t surprising and are reflective of the domestic market. In Hong Kong, the insurance industry is mainly centered around life insurance and relies on an intermediary-led distribution model because customers are still demanding human advisors, he said.

Hong Kong had more than 115,000 insurance agents and brokers in January 2023, according to data from the Insurance Authority (IA). That number is projected to increase as Manulife, AIA and Prudential are planning to hire a combined 10,000 new agents this year.

Despite the industry’s heavy reliance on sales agents, Roiret said that the emergence of virtual insurers, coupled with rising usage of digital channels fueled by COVID-19, put pressure on traditional players to improve their digital capabilities, providing a positive outlook for Hong Kong’s digital insurance sector.

The rise of Hong Kong’s virtual insurers

Hong Kong, which introduced a new licensing regime for virtual insurers in 2019, is currently home to five such digital players. Four, namely OneDegree, Bowtie Life Insurance, Avo Insurance and ZA Insurance, have been issued licenses by the IA over the past three years, while Blue became a digital insurer from a traditional firm in 2018 through an acquisition.

These virtual insurers have witnessed notable growth since their launch. According to a 2022 report by Hong Kong-based consultancy Quinlan and Associates, Hong Kong’s virtual insurers saw their premiums grow by a factor of eight, between 2020 and 2021, soaring from just HK$43 million to a whopping HK$345 billion.

The advent of Hong Kong’s virtual insurers comes on the back of a profound and long-lasting shift in consumer preferences towards online channels. In 2021, 35% of Hong Kong consumers said they preferred purchasing insurance products through digital channels over non-digital, up 7 points from 2020’s 28%, an analysis by Quinlan and Associates shows.

Similarly, consumer willingness to buy insurance online also increased, rising 19 points from 41% in 2019 to a remarkable 60% in 2020.

Hong Kong consumers' preferred insurance distribution channels, Source: Quinlan and Associates, Dec 2022

Hong Kong consumers’ preferred insurance distribution channels, Source: Quinlan and Associates, Dec 2022


Featured image credit: Edited from Unsplash and freepik