The crucial role of our insurance business
Why does HSBC have an insurance business, HSBC Life? Because it’s critical to both our customers and to the bank, explains Ed Moncreiffe, our CEO, Global Insurance.
I’m frequently asked this question and I can understand why. Insurance is complicated and hard to get right. So why do we do it?
As a bank we’re committed to supporting our customers’ financial resilience, as well as their physical and mental wellbeing, and opening up opportunities for them. Having an insurance business allows us to offer a full-service suite of wealth protection and preservation products and means we can look after all of a customer’s needs, across their life stages. And this is what makes us unique in the industry.
Meeting customer needs
From millennials looking for their first guaranteed savings solutions, to young adults buying their first life insurance plan, parents planning for their children’s education and their own retirement, all the way to high-net-worth and ultra-high-net-worth clients needing estate division and legacy planning.
At HSBC, we know that life is rarely a straight line, so whatever the unexpected or the adversity, we’re there for our customers. And with 12 life and health manufacturing companies across the world, five insurance brokerage and financial advisory companies, and strategic partners in 26 other markets, we’re there where they need us.
And it’s not just retail customers. We also cater for our corporate clients’ needs through providing employee benefits for their staff and other essential products such as ‘key man’ insurance, which protect companies’ most valuable assets – their people.
How we stand out
HSBC Life’s key differentiator is the value of our network. We are part of one of the world’s largest universal banking groups, so we can give customers a holistic approach that they cannot get elsewhere.
We connect our claims technology with the bank’s payments technology to make things easier and simpler for our clients. To give you an example, our medical insurance clients in Hong Kong can submit and receive their claims payments in just five minutes, rather than the five days that the rest of the industry takes.
Not only does this benefit customers, but it also benefits our network of over 2,000 doctors and clinicians – simply, they get paid for their work quicker.
Our network also enables us to give clients access to opportunities that our competitors cannot. A key example is how we design our savings plans. As an institutional investor with over USD100 billion in assets, we are able to pool our portfolios with HSBC Asset Management.
This means we can offer retail wealth customers access to higher yielding alternative asset classes, such as private equity and infrastructure debt, that would be otherwise inaccessible.
Inclusion
For me, one of the things I’m proudest of is how we’ve put inclusion at the heart of everything we do at HSBC Life. We were a founding signatory of the UN Principles for Sustainable Insurance. But it goes beyond that.
Our products and services are designed with inclusivity front of mind – taking into account changes in society, demographics and medical advances. And crucially, where our products fall short of being inclusive, we adapt them.
We have led in this space in various markets. In Hong Kong, we were one of the first to recognise same-sex and co-habiting couples in life insurance policies, whilst in the UK, we’ve made significant changes to life and critical illness products to include more people with mental health issues.
Insurance within HSBC
The benefits don’t end there. HSBC Life is also key to the overall HSBC business. It’s an accelerator and differentiator for HSBC’s wealth management franchise, which is a key strategic priority and growth area for the bank.
Insurance contributes more than 20% of the bank’s wealth revenues and importantly, as a long-term business, we’re not as affected by economic volatility as other parts of the business. You could say we’re a hedge against interest-dependent business lines.
The nature of our products also means that we’re an enabler of long-term client relationships. Our products typically have a life of over 20 years. This affords us the privileged position of having deep, long-standing relationships with our customers, so we can offer them a much more personalised, bespoke service.
It also means that insurance is a key route into HSBC for many new-to-bank clients. This is particularly the case in markets such as Singapore and mainland China where we have scale tied distribution outside the bank.
What’s next
HSBC Life’s momentum is strong. Indeed, our current growth rate is best in class. And we have big ambitions. Over the next three years, I want us to become the leader and go-to insurer for high net worth in Asia.
We’re already on our way – we recently sold the most valuable life insurance policy in history, valued at USD250 million. And there’s more of that to come.
Continuing to grow our insurance-led financial advisory services will also be a key priority. We already provide this in mainland China and Singapore, where our highly skilled insurance experts help clients to structure their financial planning.
And we will integrate ever more into the overall HSBC bank digital platforms – making it quicker and easier for more customers in more places to manage their portfolios and liaise with us.
The more we synergise, the bigger the benefits for our clients. The opportunities for this are huge, especially in the UK and Mexico, so watch this space.
Global trends in insurance
There are a number of key global trends that make insurance more relevant and powerful than ever before.
- Interest rate uncertainty: During economic and market volatility, people tend to adopt a ‘risk-off’ attitude and make more defensive financial decisions, such as protecting their wealth, their assets and their families through insurance products.
- Growth of the middle class: By 2030, a further 700 million people are expected to join the global middle class, making it more than half of the world’s total population. With a rise in wealth, insurance becomes an aspirational asset and a vehicle to improved quality of life through private healthcare, private savings, and planning for retirement and children’s education.
- The world is rapidly ageing: There is a growing global retirement savings gap. Preventing this from escalating further will require a renewed focus on planning for older age, with insurers leading the way in managing longevity risk.
- Rise of high-net-worth and ultra-high-net-worth individuals: By 2030, we estimate that there will be 22 million millionaires in Asia, up from 10 million in 2022. Life insurance is key to structuring legacy and estate planning. There is currently a wave of first-generation private wealth starting to transfer assets to the next generation – by 2030, more than USD18.3 trillion is expected to be transferred.