Whitepaper GBA Outlook: Opportunities in Insurance jointly published by Deloitte China and BOC Life
Published date: July 22, 2022
As a powerhouse of China's economic growth, the Guangdong-Hong Kong-Macao Greater Bay Area ("GBA") has a population of more than 86 million and a combined GDP of RMB12.6 trillion (equivalent to 11% of national GDP). It presents many opportunities on which insurers can capitalize. Fueled by policy support from the central and Hong Kong governments, it is envisioned that the cross-boundary insurance process could be further streamlined.
Second from left: Joanna Wong, Partner, Hong Kong Insurance Leader, Deloitte China, Third from left: Wilson Tang, Chief Executive of BOC Life
Customer behaviors and preferences towards cross-boundary insurance vary across different cities hence insurers should consider specific, city-based approaches to capture customers, according to the whitepaper GBA Outlook: Opportunities in Insurance jointly published by Deloitte China and BOC Life. This paper summarizes the results of more than 1,100 respondents across the GBA and other Mainland cities. Its purpose was to identify the differentiators and denominators of customer's behaviors by age between mainland cities and Hong Kong.
According to the survey results, except Guangzhou, Shenzhen and Hong Kong, insurance penetration in other GBA cities is less than 10%. A large majority (80%) of GBA customers have no experience in buying insurance products from Hong Kong or Macao, but they expressed a strong interest in learning more about cross-boundary insurance products, especially interested in critical illness coverage (64%) and medical insurance products (63%). Over 60% of respondents indicated that lack of familiarity with insurance products and regulations is the main reason not to subscribe insurance.
"To address the protection gap and as a first-mover, insurers need to review their strategy and tactics to position themselves as a top-of-mind brand in the GBA market. Interestingly, although customers in Hong Kong mostly prefer to face-to-face interaction with their insurers, those in the mainland cities are more receptive to digital channels," says Joanna Wong, Partner, Hong Kong Insurance Leader, Deloitte China.
"In addition to complying with the regulatory requirements for cross-boundary financial services, such as capital flow and data privacy issues, insurers that are keen to establish their footprint in and beyond this region in the future should consider incorporating as many digital touchpoints as possible in the customer journey, alongside physical service centers and tech-savvy agents to maintain personalized human interaction and create a seamless customer experience."
"The large population base of the Greater Bay Area provides huge market potential and new footholds for development of the insurance industry. The survey findings in the whitepaper shed light on consumer needs in the region, facilitating insurers in development of products and services to meet the different needs of customers across the GBA," says Wilson Tang, Chief Executive of BOC Group Life Assurance Company Limited ("BOC Life").
Furthermore, respondents in mainland cities with experience buying insurance from Hong Kong or Macao emphasized their offer of more reasonable premiums, higher yields and wider coverage. Another finding regarding Hong Kong-based insurers is that they are top of mind (54%) for those when buying cross-boundary insurance products; and they are seen to provide more confidence and guaranteed service quality.
In terms of insurance product preferences, critical illness coverage and medical insurance products ranked top two among GBA customers – both above 80% while only 61% of Hong Kong respondents chose critical illness. In fact, many mainland customers prefer buying insurance from Hong Kong providers to improve their healthcare benefits.
The pandemic has led customers to be more health conscious, placing more emphasis on and the quality of life in general. More than 57% of the survey respondents are using health app and 23% are planning to use one for health monitoring with special interest for the rewards offered by these apps. It seems like a good opportunity for health insurers to promote the benefits of their apps to increase customers' engagement and drive loyalty.
When comparing the preferences in term of products between different age groups, the choices are closely associated with one's health and financial status. 96% of the survey respondents aged between 35 and 44 years old have experience in buying insurance while it is true only for half of the age group 18 to 24 years old. Insurance products such as accident insurance, participating policy and life insurance are less popular among the young generation.
Product offerings with short-term, convenient, and affordable propositions are one of the many possible tools to gain more traction in the GBA, and are aligned with future trends. These propositions will be particularly appealing to younger people who value product flexibility and affordable premiums.
For Hong Kong insurers, although the pandemic has affected their business with Mainland customers, it created rising demand among customers for protection insurance products. Indeed, as indicated in the whitepaper, around two-thirds of the survey respondents are using health apps, which reflects an increased awareness of healthcare. Insurers should always stay close to customers' needs on health and wellness when designing insurance products and services.