Q&A: HKFI’s new chairman on the GBA, RBC and ESG
May 20 2021 by InsuranceAsia News
InsuranceAsia News (IAN) recently caught up with Edward Moncreiffe, chief executive of HSBC Life (Hong Kong) and the new chairman of the Hong Kong Federation of Insurers (HKFI).
Moncreiffe spoke about the association’s key priorities over the next 12 months for its members.
IAN: How is the HKFI approaching the Greater Bay Area?
Moncreiffe: For the Greater Bay Area (GBA), the HKFI has been actively collaborating with the Insurance Authority (HKIA) and mainland China regulatory authorities on a number of cross-border initiatives that can deliver more seamless integration with the mainland and better access to the Hong Kong market for the more than 70 million residents across the GBA. Initiatives currently under detailed review include the establishment of Hong Kong servicing centres in the mainland and Insurance Connect.
With the launch of the Wealth Management Connect just around the corner, we are also exploring potential opportunities to integrate our market’s leading insurance solutions under that regime.
IAN: What other key priorities do you have at the HKFI for the next 12 months?
Moncreiffe: For insurtech, as a result of the pandemic, and the subsequent social-distancing controls it has led to, we have observed a tremendous increase in the demand for technology-driven application and fulfilment capability from customers, intermediaries, insurers and regulators in Hong Kong.
We expect this will lead to subtle shifts in consumer behaviour even after Covid, and the HKFI has a critical role to ensure that digital and virtual technologies (and providers) are enabled fully, and risks are controlled properly, for all Hong Kong insurers. Our signature Insurtech Motor Insurance DLT-based Authentication System (MIDAS) is Asia’s first industry-wide blockchain solution for authenticating motor insurance to combat fraud. Looking forward, we are considering deploying the MIDAS platform for other purposes where we believe DLT technology can deliver better outcomes for society.
In relation to environmental and social governance (ESG), the HKFI has been declared as a Supporting Institution of the Principles for Sustainable Insurance (PSI) at the United Nations Environment Programme (UNEP). Following the establishment of the Green and Sustainable Finance Cross-Agency Steering Group by Hong Kong’s regulators, the HKFI has set up a dedicated taskforce on this subject to spearhead various action items across disclosures, investments, education and product development to ensure the sustainable development of our industry in Hong Kong.
With lower-for-longer interest rates and compressed fixed income yields, the HKFI is driving the industry in prioritising product innovation, particularly with regards to helping to close the large and growing protection gaps and retirement gaps faced by Hongkongers. We are working with regulators to introduce a new category of unit-linked product (a protection-linked plan) that provides for high and meaningful protection alongside a series of guided and relevant investment options from which customers can choose to grow their wealth over the long-term. This type of product innovation will also become more important as we look forward to a new risk based capital (RBC) regime.
IAN: How ready is Hong Kong for RBC and IFRS 17?
Moncreiffe: The Hong Kong industry is facing a new accounting regime and a new capital regime in the next few years, and these are very sizeable transformation programmes for all insurers, no matter how big or small. The HKFI continues to run a series of organised webinars and training on ERM and ORSA to help educate and equip insurers their boards and their staff with the requisite knowledge.
We have also launched a training programme, Certified Risk Management Professional (CRMP), in collaboration with the Risk and Insurance Management Society (RIMS). We will continue to provide training on RBC and IFRS 17 in order for our members to smoothly transit to these new regulatory regimes.
IAN: How is the Hong Kong insurance market looking to help the city bounce back from the pandemic?
Moncreiffe: Insurance at its core is a mechanism to pool risk and protect people and communities from unexpected financial losses. Although our industry has not been on the front-line in the battle against Covid-19 like the healthcare and pharma sectors, we have played our part in enabling more individuals to access preventative and remedial healthcare solutions during the pandemic, and softening the financial impacts that business have incurred as a result of prolonged international and local lockdowns.
The insurance sector directly supports the livelihood of over 120,000 employees and contractors in Hong Kong and as the city fights its way out of Covid-19, insurance will continue to play a vital role as the safety net that enables our society and economy to bounce back in the coming years.
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