To compete with domestic rivals
UK-based financial giant, HSBC intends to expand its bancassurance model in Hong Kong to the rest of China, reported China Business Weekly. Bancassurance is the practice of selling insurance products through a bank. The word is evolved from bank insurance model (BIM). HSBC Life’s bancassurance model is the chief insurance sales channel HSBC uses in Hong Kong.
Terry Lo, CEO of HSBC Life Insurance, firmly believes that in a depressing business environment, customers will opt for indemnity insurance model over investment-related insurance products. He said that HSBC can offer a range of insurance products across the mainland, and for the purpose, the bank is open to forge alliances with domestic banks as new channels of distribution.
Mr. Lo said: Whether the economy is on the upswing or experiencing a downward trend, the insurance sector belongs to the category that is less affected. That’s why even during the Asian financial crisis in 1997, the overall insurance market in Hong Kong maintained double-digit growth, reported the newspaper.
In Hong Kong, insurance has become a key financial planning tool among our wealth management products. For example, if a client walks into any HSBC outlet, the staff will provide an overall wealth management plan, where certain insurance products are suggested in line with the client’s own needs. We hope to promote such a mature model to the rest of China, Mr. Lo added.
HSBC got approval from the China Insurance Regulatory Commission (CIRC) to launch a jointly held insurance company, HSBC Life Insurance with Beijing-based National Trust. According to HSBC, each holds 50% stake and the new entity will have a capital of approximately $73 million. It is expected to commence its operations in the second half of 2009 financial year.