Pacific Century Insurance sceptical on unit-linked

Pacific Century Insurance's deputy chairman and chief executive, Andrew Yang, believes insurance companies should concentrate on traditional protection products and not be involved in the unit-linked business. He discusses this and the Hong Kong insurance market.

What are Pacific Century's main products?

Andrew Yang: Pacific Century Insurance is a life company. We sell traditional life products, mainly whole life, endowments and term insurance. We also have some unit-linked products.

How do you view unit-linked products?

I personally am not for this product. I believe that insurance companies should concentrate on the insurance business, which is selling guaranteed products, providing protection for our clients. Investment-linked products are investments which should be left to fund managers and banks. When insurance companies start selling linked products I think they are moving in the wrong direction.

Insurance companies should not only look at the top-line. We should look at our core business, and at what is our purpose in selling policies. We sell policies that are for protection, not investment.

What prompted you to have unit-linked products at all?

There were so many requests from the agency force that we felt we had to provide these products. We had to show our support for agents and clients. Our unit-linked products were well received by agents and their clients, but I personally try not to push these products.

Will you continue to focus mainly on the traditional area of insurance?

I still believe there's plenty of room for expansion of the insurance market in Hong Kong. If you look at the percentage of insured in the population, Hong Kong is not the highest in the region. So I think there is room for growth over the next few years. 

How do you view the increasing professionalism of the agency forces?

I think it has gone too far, although the government has already agreed to reduce the requirements. If one talks to the general public about professionalism and learning more, the response is always that it's good. But in actual life, education and examination often has little to do with selling. Some kind of regulation in terms of licensing and examination is fine, but they have made it too complicated. Some sort of examination and licensing is a good thing, but you have to get it right.

The title of CFP, LUA or whatever, bewitches some agents. They spend a lot of time studying and so forth. This is vanity and not practical. Their practical job is selling. They have to sit round and think about the reason for their joining this business. If they really want to study they can go and do so, but their job as agents is to sell.

Who do you see as your main competitors in the market?

Actually there's no prime competitor. Every agent has his or her own market. No matter what company you work for, or whatever the economy is doing, it depends on the agents themselves. Our target market is very broad. It depends on the clients of our agents. Our lowest premium is only a couple of hundred dollars a month, right up a few hundred thousand a year.

Are you looking to expand the range of your products?

We have a comprehensive range as it is, although we might consider new products as the market changes.

Are you looking to expand geographically in Asia?

The first place we would look to expand, if we get the chance, is China. We do have three representative offices, in Shanghai, Beijing and Guangzhou. So we can't yet do any business, but it is required to have the representative office before you get a license to operate. Hopefully we will get the license soon, but we don't know when.