Insurer goes after Asian middle-class families
Updated: 2015-06-27 08:15
(HK Edition)
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A survey by AIA Group shows middle-class families in Asia care most about health, followed by making life better for themselves and their children. The accumulation of wealth, of course, is important too. Gordon Watson, regional chief executive of the group, explains the reason behind the phenomena in a Q&A.
AIA Group Ltd unveiled on June 11 findings from its 2015 edition of the AIA Survey on Middle Class Hopes and Aspirations in Asia, which found that nearly four out of five (79 percent) respondents across the Chinese mainland, Hong Kong, South Korea and Taiwan are satisfied with life. Yet, less than half (41 percent) feel they are both satisfied and successful. A majority of the respondents also prioritize health, peace of mind and a comfortable retirement as their top life goals.
Q: Why did you do the survey?
A: We really want a broader market here and we really want to understand the upcoming middle class, what their desires, what their needs are and what is important to them.
This is the third year that we are conducting the AIA Survey on Middle Class Hopes and Aspirations.
The insights the survey provides allow us to continue to develop products and services that support our customers and their families through their different life stages.
We will add the insights gained from this survey to the vast knowledge base, regarding our customers that we have accumulated over the more than 90 years, that AIA has been meeting the protection needs of people across this region.
Q: You mentioned the "upcoming middle class". So why you use "upcoming", and how do you define the class in Asia?
A: When people start to buy protection insurance, he or she is going to start to make over $10,000. So that is when people really start to need insurance. That is why it is so important to regroup this market.
Q: How does this survey fit in with your overall business objectives?
A: We want to make sure we understand the needs of the customers, and obviously there are things like health, saving for retirement is becoming really important.
Asia is one of the fastest-growing regions in the world, and the life goals and aspirations of the people here will continue to change as the regional economy evolves. The region's fast-rising middle-class group will inevitably see the most significant changes in lifestyle and protection needs.
The size of the "global middle class" will increase to 4.9 billion by 2030. The bulk of this growth will come from Asia: By 2030, Asia will represent 66 percent of the global middle-class population and 59 percent of middle-class consumption (source: OECD, 2012). Increased wealth drives increased demand for insurance protection.
Q: What were the biggest differences across the surveyed North Asia markets? What factors led to these differences?
A: I think there are more commonalities than differences. For example, all of them think that health is the most important goal in life. They are more motivated to make life better for themselves or for children, than to become wealthy.
They are highly involved in their children's education and also have high aspirations for their children.
In terms of differences, the majority of Chinese mainland, Hong Kong and Taiwan's middle class think children should provide financial support to their parents in old age, only less than half (47 percent) of respondents in South Korea believe this.
QIt appears there is a strong emphasis on childcare and education in North Asia. Most parents start preparing for their children's education at a very early age. How does this compare with last year's survey on the ASEAN markets, and the one conducted in 2013 in the Chinese mainland, Hong Kong, Macao and Taiwan markets?
A: This is the first year that we asked middle-class parents on when they start saving for their children's education.
Interestingly, over half (53 percent) of middle-class parents start saving for their children's education before their child attends kindergarten.
In Hong Kong, the financial commitment to children's education starts even earlier, with almost one-third (31 percent) of respondents indicating they begin saving for their children's education even before they have any. A total of 76 percent of Hong Kong respondents indicate that they start saving at the stage when their children attend kindergarten or earlier. This percentage is much higher than the regional average.
Q:Does the launch of this survey mean that AIA will now focus on some products that target the middle class?
A: Throughout the Asia Pacific region, we offer a wide range of products and services tailored for different customer segments, many of which fall within the category of "middle class".
On the Chinese mainland, we launched a new long-term product specifically designed to meet education-funding needs. In Hong Kong, we produced a packaged comprehensive retirement solution for our customers to raise awareness about retirement planning. In South Korea in 2014, we extended the simplified issue health product to agency and broker channels and the popularity continued throughout the year.
Q: How will the findings impact AIA's future business development?
A: We use the knowledge about our customers that we have gained over many years to continue to develop products and services which support each customer and their family through every stage of their life, and this survey is another means to add to our extensive body of understanding about our customers and their priorities and expectations.
Q:What is the size of the protection gap in Asia?
A: The region is increasingly underinsured, both in terms of protection cover and long-term savings. The size of the life protection gap is estimated to be more than $41 trillion across the Asia Pacific.
We are committed to addressing this by investing more in consumer education, providing products that best suit people's evolving needs, enhancing the training of our people, diversifying our distribution platforms and innovating through technology.
Q: What's the competitive advantage of AIA?
A: AIA's proprietary tied agency force is the cornerstone of our distribution platform and a significant competitive advantage for AIA.
Under the umbrella of our Premier Agency strategy, our priority is ensuring that our agency force has the skills and knowledge they need to provide sound, professional advice to our customers.
Our agency business generated 21 percent growth in VONB (value of new business) to $1.4 billion in 2014, accounting for 72 percent of the group's total VONB. ANP (annualized new premium) grew by 8 percent in reporting currency and VONB margin increased by 6.9 percentage points to 60.8 percent.
(HK Edition 06/27/2015 page7)