Asia’s numerous emerging markets and enormous population has caught the attention of the global insurance community. Now, two of its top financial centres are vying to become the continent’s insurance capital.
Hong Kong and Singapore have their similarities, such as both being highly urbanised island-cities with high GDP per capita. Both are strategically situated at major harbours along crucial shipping routes, contributing to their prosperity. Numerous financial companies, including global insurers, also have their Asian headquarters in either or both of the two markets.
Insurance Business spoke with Kevin Angelini, head of strategy for the Asia-Pacific insurance consulting and technology business at Willis Towers Watson, to find out more about the so-called rivalry between the two markets and their contributions to the insurance industry in Asia and globally.
According to Angelini, Hong Kong is leading in the life insurance segment, as the main life insurance groups such as
AIA,
Manulife, Sun Life,
AXA, and Prudential have their headquarters there. Meanwhile, Singapore focuses more on general insurance, housing the likes of
AIG,
IAG and
QBE.
“It’s worth noting, though, that Singapore is drawing more attention from the high net worth segment because of its private banking landscape,” he added.
With regard to each territory’s strengths, Angelini noted the presence of strong international capital markets and solid legal systems in both. These are prerequisites to becoming a financial centre and attracting global businesses. However, each market attracts a different niche of business.
“Hong Kong’s strengths lie mainly in large international and multinational business,” he said. “Hong Kong also has proximity to mainland China which has the most insurtech activity, so the city can benefit from cross-border activity with mainland China.”
He continued: “Singapore’s strength lies in its agility and in its focus on small business start-ups. Generally speaking, Singapore attracts more insurtech-related initiatives, mainly because its regulator, the
MAS (Monetary Authority of Singapore) is pushing hard for such innovation.”
Amid the innovation race between Hong Kong and Singapore, the climate for insurance intermediaries is bound to change, Angelini said, especially as digitisation of insurance takes centre stage. This will force intermediaries to adapt new market models in response.
“Generally speaking, we see more focus on digital channels, such as online and mobile - that’s in both Singapore and Hong Kong,” he explained. “Singapore Life is a recent entrant into the life market in Singapore and it aims to make its business more customer-friendly to enable direct interactions with customers. Besides all that, we’re going to see more technology enabled business, such as robo-advisory, also becoming more common”
The UK’s decision to leave the European Union, popularly known as Brexit, is sending waves across the financial world, and Asia is not isolated from those changes. Many firms have their Europe regional headquarters in London, and the UK leaving Europe’s single market has caused some companies to think about bringing their business elsewhere.
“UK-based groups will reconsider whether or not to continue to have their group headquarters in London once Brexit takes place, if not before,” Angelini said. Other financial hubs around the world will look to attract some of the business that leaves British shores.
“The overseas Lloyd’s business will continue to benefit from the reinsurance business from Asia including Singapore, China, India, and Hong Kong,” he added. “As well, Lloyd’s will have its businesses in continental Europe.”
Given each territory’s advantages over the other, as well as differences in focus, a clear winner has yet to emerge. The regulators of both markets are currently working, both individually and cooperatively, to improve the financial landscape as more and more of the global economy turns to Asia.
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