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Market challenges and new regulations and will provide fresh opportunities in HK’s insurance sector in 2016

Published on Saturday, 23 Jan 2016
Daniel Li is director – banking and insurance at Kelly Services Hong Kong
Market challenges and new regulations will provide a variety of job options in HK’s insurance sector in 2016.

At the turn of 2016, there was much news about the banking and finance sector, especially in investment banking. In contrast, insurance firms seem to be getting less attention lately. 

At a time where “no news is good news”, many people expect the insurance sector to be a stabiliser in the banking and finance industry. However, while the Hong Kong insurance market will likely experience another year of stable (though modest) growth, the sector will not be spared certain challenges. 

However, quite on the contrary, the insurance sector will face major changes in 2016.

A coming together

The market will probably see an increase in M&A activities, and insurance professionals will face a steep learning curve to contend with a new wave of regulations that are soon to be released.

In Hong Kong, we expect the existing insurance players to continue striving for growth and expansion in an already crowded market. 

The current uncertain economic situation may induce companies to make some major changes. This could involve merging with other companies to sharpen their competitive edge, selling off certain arms in order to focus on core businesses, or streamlining their business operations. As a result, there will be staff redundancies and yet, at the same time, there will be new roles to be filled in the year.

A new authority

The Financial Services and Treasury Bureau announced that a new Independent Insurance Authority (IIA) will replace the entire insurance regulatory framework in phases. IIA will take over the Office of the Commissioner of Insurance possibly by the second and third quarter of this year, and subsequently absorb the self-regulatory organisations of the insurance intermediaries in 2017. 

Practitioners expect the IIA to introduce stricter regulations, enhance public confidence in the insurance industry, and improve customer protection. As a new and powerful regulator for the insurance industry, the IIA will possess similar powers to the Hong Kong Monetary Authority and the Securities and Futures Commission. 

As a result, major changes in compliance regulation may happen sooner rather than later. This will lead to upheaval across various departments in insurance firms, from compliance, actuarial and credit risk to sales practices. These firms will need to fill new in-house vacancies in legal, compliance and risk management, and fight for candidates who are already in huge demand in the banking sectors. 

Additionally, the IIA will also be building up its own staff, which will be partly filled by candidates from the companies the IIA will oversee. 

Compared to banking and other industries, the insurance sector is considered a late adopter of alternative staffing models other than permanent hires. Up to 2015, only a handful of insurance companies have tried contracted professional staffing. We believe the success of these examples will inspire more companies to try this hiring model, especially with the uncertain economy in 2016.

A fresh set of opportunities

Unlike other industries, where marketing activities are largely planned, the insurance industry is often reactive to market mishaps or incidents. 

In past years, aviation and marine insurance were in the spotlight. With the recent terrorist bombing in Jakarta and earlier attacks in Paris, terrorism insurance may gain popularity. By the same token, who knows whether the discreet “kidnap and ransom” insurance offered exclusively to the powerful and wealthy may suddenly be more widely sought-after. Regardless of the nature, these incidents may trigger a hiring of professionals with the necessary expertise in underwriting, claims and actuarial functions.

Though Hong Kong is a mature market for insurance products, with little room for organic growth, insurance professionals will still have new opportunities as a result of the continued influx of new insurance names registering in the region. 

Following the One Belt, One Road initiative put forward in Leung Chun-ying’s 2016 policy address, we foresee that the trend in insurance company growth will continue.

International insurance and reinsurance companies with experience in insuring infrastructure projects – such as airports and express rail links – will see opportunities in the development of the “21st Century Maritime Silk Road” in mainland China, assisted by the Closer Economic Partnership Agreement (CEPA).

Chinese insurers may also be interested in establishing captive insurance companies in Hong Kong, to self-insure their business risks. 

These many changes in the industry will offer opportunities for those who are equipped and prepared. 


This article appeared in the Classified Post print edition as Premium opportunitites. 

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