Transcript 3. Composition of insurance industry in Hong Kong

Financial Institution in Hong
Kong
Topic:
Future Development Of
Insurance Industry In
Hong Kong
(Entering the China’s Insurance
Service Market Sharing)
Group 2
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039007
039011
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Zenki Yu
Jackie Li
Oliver Choi
Carmen Law
Sarah Fu
1. Abstraction
 the future development of the whole
insurance industry in Hong Kong
 the future development of the particular
insurance companies.
 Manulife Company as an example
 have a comprehensive understanding for
the insurance industry.
2. Introduction of Insurance
Industry
The Conditions of Existing
Insurance Industry
 Prevent Suffer Loss
 Diversification of Risk
2. Introduction of Insurance
Industry
 Transaction Cost (Asymmetric
Information)
 Adverse Selection
 Moral Hazard
 Specific Hold-ups
 Takes place after the transaction
 Happens between clients and
insurance companies / agents or
brokers and insurance companies
3. Composition of insurance
industry in Hong Kong
A. The size of insurance business in
Hong Kong
2002 2003
HK$m HK$m
2004
HK$m
General Business- 23,44 24,766 23,478
Gross Premium
8
Long Term
Business-Office
Premium
65,51 77,225 98,414
7
Total
88,96 101,99 121,89
5
1
2
3. Composition of insurance
industry in Hong Kong
100000
10
90000
9
80000
8
70000
7
60000
6
50000
5
40000
4
30000
3
20000
2
10000
1
0
0
1994
1995
1996
1997
1998
1999
year
2000
2001
2002
2003
2004
General
Business
Per cent %
HK$million
P rem ium
Long term
Business
% of GB and LtB in GDP
3. Composition of insurance
industry in Hong Kong
a. Insurer authorized in Hong Kong and
they distributed by types of insurance
business and countries of incorporation
11%
general business insurers
26%
long term business insurers
63%
composite insurers
3. Composition of insurance
industry in Hong Kong
b. The major classes of insurance
business and their respective
market (For general business)
17%
27%
general liability
property damage
13%
accident and health
motor vehicle
19%
24%
other
3. Composition of insurance
industry in Hong Kong
b. The major classes of insurance
business and their respective market
(For long-term business)
13%
3%
indibidual life business
retirement scheme
management
other
84%
3. Composition of insurance
industry in Hong Kong
individual life policies
100
6000000
90
80
5000000
4000000
Individual life policies
60
50
3000000
40
2000000
30
20
1000000
10
0
0
1994
1995
1996
1997
1998
1999
year
2000
2001
2002
2003
2004
percent %
no.of individual
70
% of individual life policies in
HK population
3. Composition of insurance
industry in Hong Kong
B. Manulife’s Financial Highlights
a. Total Assets Under Management:
Total Assets Under Management
90
80
70
Total
Assets
Under
Manage
ment
60
HK$ billions
50
40
30
20
10
0
2000
2001
2002
year
2003
2004
3. Composition of insurance
industry in Hong Kong
b. Total Premiums and Deposits
Total Premiums and Deposits
14
12
10
Total Premiums
and Deposits
8
HK$ billions
6
4
2
0
2000
2001
2002
year
2003
2004
3. Composition of insurance
industry in Hong Kong
c. Benefits Paid
Benefits Paid
4
3.5
3
2.5
HK$ billions
2
Benefits Paid
1.5
1
0.5
0
2000
2001
2002
year
2003
2004
3. Composition of insurance
industry in Hong Kong
d. Policy Dividends Paid
Policy Dibidends Paid
800
700
600
500
HK$ billion 400
Policy Dibidends Paid
300
200
100
0
2000
2001
2002
year
2003
2004
3. Composition of insurance
industry in Hong Kong
e. Number of Individual Policies in Force
Number of Individual Policies in Force
1000
900
800
700
600
No.
Number of
Individual
Policies in
Force
500
400
300
200
100
0
2000
2001
2002
year
2003
2004
3. Composition of insurance
industry in Hong Kong
f. Number of Agents
Number of Agents
7,000
6,000
5,000
4,000
no. of agents
3,000
Number of Agents
2,000
1,000
0
2000
2001
2002
year
2003
2004
4. Regulations of insurance
industry
 Financial Examination
 Onsite Inspection
 Market's Consolidation
 Actions of Insurance Authority (IA)
include: limitation of premium
income, restrictions on investments,
requirement for a special actuarial
investigation
 Self-Regulatory Initiatives
5. Operations of insurance
organization
A. Data Collection and Statistical
Estimation
 measure the optimal premium and
compensation
 the Central Limit Theorem
 set how much is the premium
 opportunity cost for the
policyholder
5. Operations of insurance
organization
B. Contractual Consideration
 asymmetric information as well as
unexpected risks
 fulfill the right and duty
 risk being transferred, diversified
or alleviated
6. Case Study of Manulife
A. Introduction of Manulife Company
 Manulife Life Insurance (Hong Kong)
Limited
 "AA+ (Very Strong) by Standard &
Poor's
 www.manulife.com.hk
 bancassurance alliance with CITIC Ka
Wah Bank
 "Guaranteed Retirement Income Plan"
6. Case Study of Manulife
B. Products of Manulife
 individual insurance, group life &
health, wealth management, MPF
& Occupational Retirement
Schemes Ordinance (ORSO),
general insurance, credit cards
 Personal Life and Health
Insurance
6. Case Study of Manulife
B. Products of Manulife
 life insurance is dividend into
Whole Life, Term, and Endowment
 In the policy, there are many
information, premium paying
period, basic plan premium,
interest, etc.
7.Future development
A. Hong Kong insurance industry
 Statistics also indicated strong signs
of recovery in the long term business
market and general business market
 According to latest figures:
178 authorized insurers
112 general business insurers
46 long term business insurers
7.Future development
A. Hong Kong insurance industry
 Hong Kong's insurance market has
a strong international presence.
 Over half of the authorized
insurers are incorporated outside
Hong Kong in 25 different
countries. (US companies taking
the lead)
7.Future development
A. Hong Kong insurance industry
 China's accession to the World
Trade Organization opens up more
opportunities for Hong Kong
insurers.
 China's total premium income grew
to US$25 billion for 2001, an
increase of 32 percent over 2000.
7.Future development
A. Hong Kong insurance industry
 After joining the WTO, China is
committed to further widening market
access to foreign players, which
enables Hong Kong a bigger role to
play.
 Hong Kong is well poised to develop
into an important insurance center
7.Future development
B. Manulife
Future development of Manulife
 Whisked off five industry awards
this year.
 Came top of its class in a newly
introduced MPF Fund category.
7.Future development
B. Manulife
Developing the china market
 Continued to expand its
operations in China and Hong
Kong with the start of operation
in cities of Nanjing, Hangzhou
and Zhongshan.
 Official Life Insurance Partner of
the 2008 Olympic Games in
Beijing
7.Future development
B. Manulife
Developing a Retirement Plan
Services in Hong Kong
 By the year 2016, more than onethird of Hong Kong’s population will
be over fifty years old.
 retirement planning should be
more important
 helping retiree to make a well
management on saving
7.Future development
B. Manulife
Development on their market share
 Manulife expects that there will have
a well development on market price
of their shares.
 market price reflect the value of its
business and its future business
prospects
 represent an attractive investment
8. Conclusion
A. Hong Kong insurance industry
 Helping people to prevent suffer
loss and diversify their risk
 Facing the problems of adverse
selection, moral hazard and
specific hold-ups
 Reducing the risks by data
collection, statistical estimation
and contractual consideration
8. Conclusion
 Five major classes of business
 Three kinds of long term business
 Self-Regulatory Initiatives
 Spreading its services in China with
benefiting China joined the World
Trade Organization
 Developing into an important
insurance center
8. Conclusion
B. Manulife
 Operating its business in China like
Nanjing, Hangzhou, Zhongshan and
so on
 Increasing the business of
Retirement Plan Services because
of serious aging problem in Hong
Kong
Financial Institution in Hong
Kong
Goal  Insurance Service Center