Investment

HSBC bets big on bancassurance

By Ma Zhenhuan (China Daily)
Updated: 2010-09-10 07:48

SHANGHAI - HSBC Life Insurance Co, the insurance arm of global financial heavyweight HSBC, hopes to further consolidate its bancassurance business in China, said Terry Lo, chief executive officer of HSBC Life.

"We've gained a strong foothold in the mainland during the first year of operation in Shanghai, with the bancassurance business ranking third among all overseas life insurers in the city," said Lo.

The insurer achieved an annualized premium equivalent of 85.7 million yuan ($12.6 million) in its first year in the mainland, exceeding its business target.

"Our goal is to meet customers' long-term financial needs at different life stages," he said.

Bancassurance, the model of selling insurance policies through banks, so far accounts for over 80 percent of HSBC Life's mainland business, mainly through 30 outlets at its partner banks, selling its retirement, medical, annuity and endowment products.

It has also built up a more than 300-member direct sales force to provide wealth management and financial planning services to high-end clients beyond the bancassurance network.

So far, HSBC Life's products are sold through outlets of HSBC, Hang Seng Bank and Bank of Communications in Shanghai. The average size of a policy sold through bancassurance is 80,000 yuan.

"We will focus on first-tier cities (Beijing, Guangzhou and Shenzhen) which have a higher affluent and high-net-worth population, and move to second- and third-tier cities afterwards," he said.

Lo added that the company plans to expand its business to eight mainland cities or provinces within five years.

China is expected to have four million affluent families by 2015, ranking fourth in the world.

This will create huge growth potential in China's insurance market, with an aging population and rising household incomes creating higher insurance demand, he said.

"Our market research tells us that customers in China are in need of long-term planning and financial protection products, and we can provide such a full range of services," Lo added.

In the first half of 2010, HSBC Life achieved a global pre-tax profit of $1.6 billion, up 36 percent year-on-year, accounting for 17 percent of the HSBC Group's overall pre-tax profit.

Its Asian business accounted for 52 percent of the overall pre-tax profit, a big jump from the 35 percent registered in the same period of last year.

China Daily