Main Region_The Inside Story of Insurance in Hong Kong SAR
The Inside Story of Insurance in Hong Kong SAR
Transformation, change and technology have been the common themes for Hong Kong’s insurance industry, with forces within and outside of the territory drastically shaping what is arguably one of the biggest insurance hubs in the world. This translates into exciting times for the industry, but not without the effects of disruption.
According to a report by the South Morning China post, Hong Kong’s insurance industry, currently a 90,000-persons strong workforce, is facing a dire shortage of manpower mainly due to the lack of fresh graduates and new entrants into the industry. In the coming year, another 3,107 vacancies in the sector will need to be filled. While traditional roles remain critical to the operations – such as underwriting, claims and servicing, alongside sales and distribution positions – candidates will need to keep on their toes to seize the abundance of opportunities. Those who do not may risk being left behind in view of the global and local regulatory changes, the boom of data science and continuing rise in InsurTech.
On the international front, a global change in reporting standards has resulted in the issuance of IFRS 17 by the International Accounting Standards Board (IASB). As such, the Hong Kong Institute of Certified Public Accountants (HKICPA) has approved HKFRS 17: Insurance Contracts, identical to IFRS 17, which is slated to come into effect in 2021. Such an imposition is a cause for concern for the industry due to the general lack of expertise in IFRS 17.
While the HKIPCA is alleviating the situation through the provision of training and support, there is worry amongst insurers that the timeframe might be too tight for the implementation of the new standard. Hence, candidates with knowledge or experience in IFRS 17 will be highly sought after over the next few years. Due to its relative newness and the candidate shortage in this area, the current workforce may need to upskill or reskill to keep pace with the market.
Locally, since the inception of the Hong Kong independent Insurance Agency (IA), the regulatory body has been hard at work in overhauling the industry in the name of protecting insurance consumers. The newly introduced risk-based capital (RBC) regime, which is set to come to full force in 2021-2022, is resulting in the way insurers manage and assess risk, thereby requiring a greater number of both Compliance, Audit and Risk experts to implement these changes.
Another monumental change IA made in late 2018 was to raise the standards for insurance intermediaries in Hong Kong. This, as reported by International Investments, affects the “2,410 insurance agencies, 63,931 individual agents, 25,668 responsible officers/ technical representatives of insurance agencies, 774 insurance brokers and 8,964 chief executives/ technical representatives of insurance brokers” currently in Hong Kong.
IA’s aim is to impose stringent standards on insurance professionals and ensure that they are “fit and proper” by assessing their qualifications or experience. In other words, should an individual be deemed “unfit”, the IA would then revoke or reject his/ her licence at their discretion.
Amid the regulatory hustle and bustle, InsurTech start-ups have sprouted and thrived in Hong Kong, offering wide-ranging solutions to the insurance value chain including product development, underwriting, sales and advisory, policy administration and claims management. Similarly, the major insurers in the city have also taken steps in digitalising their offerings and internal process.
Be that as it may, as InsurTech within companies develops at an accelerated speed, the rate at which tech talent and risk managers is in demand is outpacing supply. This dearth in adept talent is posing a challenge to Hong Kong’s insurance industry as a contender on the international playing field.
To add, insurance players, big and small, have been heatedly competing to provide customised products in response to increasingly demanding customer needs. Data science therefore continues to play a critical role in this endeavour. Data scientists with experience in deep-learning and machine-learning are therefore highly coveted by insurers because of the growing importance of data-led strategies in cross-selling, up-selling and engaging with customers.
Owing to this talent-short market, employers have been stepping up their game to retain talent. Initiatives such as job rotation and a heightened emphasis in learning and development have been in place to motivate employees and broaden their skill sets. Employers have been also painting clear career paths for employees while paying closer attention to KPIs and keeping them on track for promotion. Performance appraisals have also been more structured in their design to nurture employees and boost their morale.
To secure the best available talent, we have noticed several trends such as buyouts and sign-up bonuses, alongside the growing receptiveness of talents from different industries like banking and finance. However, much is left to be desired when it comes to employer branding to encourage more new entrants to the industry. Insurers have yet to realise the full potential of actively promoting their firms online.
Notwithstanding, in the face of changing market changes, technological advancements and evolving skill set demands in the insurance sector, candidates should by no means rest on their laurels. Keeping up with consumer trends and constantly upskilling is key to staying relevant in the ever-changing world of insurance.
Talents in the technical functions such as actuarial, data science and accounting, would stand to gain from additional qualifications and knowledge in this area due to the manner in which the insurance industry is constantly disrupted. Those in functions such as underwriting, claims, and business development, whose bargaining chip is their working experience, should consider expanding their product knowledge outside of their scope of expertise. For instance, those who specialise in employee benefits insurance may stand to benefit from learning individual medical insurance, or experts in investment link insurance could familiarise themselves with traditional life insurance.
There is no better time than the present to begin one’s job search in Hong Kong’s insurance industry for the coming year. At the moment, job seekers may experience more opportunities and greater bargaining power as compared to an increasingly competitive candidate market in Q2 of 2019. Warren Buffet’s advice, “Be fearful when others are greedy and greedy when others are fearful”, could not ring truer for candidates who want to make full use of the leverage they already enjoy.
If you would like to discuss this report in more depth or you wish to discuss your job search or recruitment needs, please email Jason Kwong, Manager for Hays Hong Kong at Jason.Kwong@hays.com.hk.