Insurers are starting to enter the family office space in Hong Kong and Singapore to meet the needs of wealthy families, driven by growing consumer demand, according to management consultancy McKinsey & Co.
Traditionally, it was banks and multi-family offices (MFOs) that served family offices, but insurers are now in the picture, along with wealthtechs to create a framework focusing on solutions, service, scalability, and security. This shift highlights the potential for insurers to offer services like estate planning and wealth transfers to clients.
Insurers are also assembling teams to provide personalized solutions. However, family offices in the Asia-Pacific region have limited engagement with insurers, stemming from the general lack of awareness of what they can offer. Many single-family offices are often led by former bankers with more experience in investment strategies than working with insurance providers on wealth transfer and succession planning.
“There is a need for the industry to engage and educate families on the potential of insurance to enable families in their wealth transfer and preservation process, such as insurance policies covering multiple generations of beneficiaries across the globe, or policies providing liquidity during estate transfers,” said Karim Gilani, president of Greater China, Singapore, and international high net worth at Sun Life.
Wong Sze Keed, CEO of AIA Singapore, emphasised the importance of a holistic approach: “Providers need to go in with a more holistic approach, with a full suite of products to holistically serve families. For instance, insurers cannot just go in and pitch insurance solutions; they also need to collaborate with other professionals, such as tax advisers and legal advisers.”
To compensate, insurers can focus on educating family offices about the benefits of insurance beyond life coverage. Collaboration is also essential, as it can build ecosystems that offer value-added services like tax and legal advisory, immigration support, and more.
Insurers are now developing strategies catered to family offices, offering policies underwritten on a case-by-case basis.
“More work needs to be done to structure products that address specific needs, particularly from the perspective of sum assured across the family. Multijurisdiction and multigeneration nuances offer challenges and opportunities with sophisticated holding structures involved," said Harpreet Bindra, CEO of HSBC Life Singapore.
Insurers should also consider post-policy-issuance services, such as regular check-ins with families, white-glove services with a focus on educating the next generation, and perks such as fast-track access to top hospitals.
Insurers can also leverage data and analytics to improve risk models and reduce losses on large policies, potentially collaborating with reinsurers. By focusing on wealth planning, succession advisory, and collaborating with WealthTechs, insurers are well-positioned to serve the evolving needs of Asia-Pacific’s family offices.
