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Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China’s Insurance Service Market Sharing)

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Page 1: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

Financial Institution in Hong Kong

Topic:

Future Development Of Insurance Industry In Hong

Kong(Entering the China’s Insurance

Service Market Sharing)

Page 2: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

Group 2

039003 Zenki Yu039007 Jackie Li039011 Oliver Choi039013 Carmen Law039014 Sarah Fu

Page 3: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

1. Abstraction the future development of the whole insura

nce industry in Hong Kong the future development of the particular ins

urance companies. Manulife Company as an example have a comprehensive understanding for th

e insurance industry.

Page 4: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

2. Introduction of Insurance Industry

The Conditions of Existing Insurance Industry

Prevent Suffer Loss

Diversification of Risk

Page 5: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

2. Introduction of Insurance Industry

Transaction Cost (Asymmetric Information)

Adverse Selection Moral Hazard Specific Hold-ups

Takes place after the transaction Happens between clients and

insurance companies / agents or brokers and insurance companies

Page 6: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

A. The size of insurance business in Hong Kong

2002 HK$m

2003HK$m

2004HK$m

General Business-Gross Premium

23,448

24,766 23,478

Long Term Business-Office Premium

65,517

77,225 98,414

Total 88,965

101,991

121,892

Page 7: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

Premium

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

year

HK

$mill

ion

0

1

2

3

4

5

6

7

8

9

10

Per ce

nt %

GeneralBusiness

Long termBusiness

% of GB and L-tB in GDP

Page 8: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

a. Insurer authorized in Hong Kong and they distributed by types of insurance business and countries of incorporation

26%

11%

63%

general business insurers

long term business insurers

composite insurers

Page 9: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

b. The major classes of insurance business and their respective market (For general business)

27%

24%19%

13%

17%general liability

property damage

accident and health

motor vehicle

other

Page 10: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

b. The major classes of insurance business and their respective market (For long-term business)

84%

13% 3%

indibidual life business

retirement schememanagementother

Page 11: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

individual life policies

0

1000000

2000000

3000000

4000000

5000000

6000000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

year

no.o

f ind

ivid

ual

0

10

20

30

40

50

60

70

80

90

100

perc

ent %

Individual life policies

% of individual life policies inHK population

Page 12: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

B. Manulife’s Financial Highlightsa. Total Assets Under Management:

0

10

20

30

40

50

60

70

80

90

HK$ billions

2000 2001 2002 2003 2004

year

Total Assets Under Management

TotalAssetsUnderManagement

Page 13: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

b. Total Premiums and Deposits

0

2

4

6

8

10

12

14

HK$ billions

2000 2001 2002 2003 2004

year

Total Premiums and Deposits

Total Premiumsand Deposits

Page 14: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

c. Benefits Paid

0

0.5

1

1.5

2

2.5

3

3.5

4

HK$ billions

2000 2001 2002 2003 2004

year

Benefits Paid

Benefits Paid

Page 15: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

d. Policy Dividends Paid

0

100

200

300

400

500

600

700

800

HK$ billion

2000 2001 2002 2003 2004

year

Policy Dibidends Paid

Policy Dibidends Paid

Page 16: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

e. Number of Individual Policies in Force

0

100

200

300

400

500

600

700

800

900

1000

No.

2000 2001 2002 2003 2004

year

Number of Individual Policies in Force

Number ofIndividualPolicies inForce

Page 17: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

3. Composition of insurance industry in Hong Kong

f. Number of Agents

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

no. of agents

2000 2001 2002 2003 2004

year

Number of Agents

Number of Agents

Page 18: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

4. Regulations of insurance industry

Financial Examination Onsite Inspection Market's Consolidation Actions of Insurance Authority (IA)

include: limitation of premium income, restrictions on investments, requirement for a special actuarial investigation

Self-Regulatory Initiatives

Page 19: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

5. Operations of insurance organization

A. Data Collection and Statistical Estimation

measure the optimal premium and compensation

the Central Limit Theorem set how much is the premium opportunity cost for the policyholder

Page 20: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

5. Operations of insurance organization

B. Contractual Consideration asymmetric information as well as une

xpected risks

fulfill the right and duty

risk being transferred, diversified or alleviated

Page 21: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

6. Case Study of ManulifeA. Introduction of Manulife Company Manulife Life Insurance (Hong Kong) Limite

d "AA+ (Very Strong) by Standard & Poor's www.manulife.com.hk bancassurance alliance with CITIC Ka Wah

Bank "Guaranteed Retirement Income Plan"

Page 22: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

6. Case Study of ManulifeB. Products of Manulife individual insurance, group life & hea

lth, wealth management, MPF & Occupational Retirement Schemes Ordinance (ORSO), general insurance, credit cards

Personal Life and Health Insurance

Page 23: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

6. Case Study of ManulifeB. Products of Manulife life insurance is dividend into Whole Li

fe, Term, and Endowment

In the policy, there are many information, premium paying period, basic plan premium, interest, etc.

Page 24: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

7.Future development

A. Hong Kong insurance industry Statistics also indicated strong signs

of recovery in the long term business market and general business market

According to latest figures: 178 authorized insurers 112 general business insurers 46 long term business insurers

Page 25: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

7.Future development

A. Hong Kong insurance industry Hong Kong's insurance market has

a strong international presence. Over half of the authorized

insurers are incorporated outside Hong Kong in 25 different countries. (US companies taking the lead)

Page 26: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

7.Future development

A. Hong Kong insurance industry China's accession to the World

Trade Organization opens up more opportunities for Hong Kong insurers.

China's total premium income grew to US$25 billion for 2001, an increase of 32 percent over 2000.

Page 27: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

7.Future development

A. Hong Kong insurance industry After joining the WTO, China is

committed to further widening market access to foreign players, which enables Hong Kong a bigger role to play.

Hong Kong is well poised to develop into an important insurance center

Page 28: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

7.Future development

B. ManulifeFuture development of Manulife Whisked off five industry awards this y

ear. Came top of its class in a newly introd

uced MPF Fund category.

Page 29: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

7.Future development

B. ManulifeDeveloping the china market Continued to expand its operations in

China and Hong Kong with the start of operation in cities of Nanjing, Hangzhou and Zhongshan.

Official Life Insurance Partner of the 2008 Olympic Games in Beijing

Page 30: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

7.Future development

B. ManulifeDeveloping a Retirement Plan Services

in Hong Kong By the year 2016, more than one-third

of Hong Kong’s population will be over fifty years old.

retirement planning should be more important

helping retiree to make a well management on saving

Page 31: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

7.Future development

B. ManulifeDevelopment on their market share Manulife expects that there will have a w

ell development on market price of their shares.

market price reflect the value of its business and its future business prospects

represent an attractive investment

Page 32: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

8. Conclusion

A. Hong Kong insurance industry Helping people to prevent suffer

loss and diversify their risk Facing the problems of adverse

selection, moral hazard and specific hold-ups

Reducing the risks by data collection, statistical estimation and contractual consideration

Page 33: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

8. Conclusion

Five major classes of business Three kinds of long term business Self-Regulatory Initiatives Spreading its services in China with

benefiting China joined the World Trade Organization

Developing into an important insurance center

Page 34: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

8. Conclusion

B. Manulife Operating its business in China like Na

njing, Hangzhou, Zhongshan and so on

Increasing the business of Retirement Plan Services because of serious aging problem in Hong Kong

Page 35: Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

Financial Institution in Hong Kong

Goal Insurance Service Center