Heng An index has insurance industry covered

Heng An Standard Life Insurance Index, the industry's first barometer, was introduced on September 17. The index was developed by Heng An Standard Life Insurance Co Ltd and Nankai University. Established in December 2003, Heng An Standard Life is a 50-50 joint venture between British Standard Life plc and Tianjin-based TEDA (Tianjin Economic Technological Development Area) Investment Holding Co Ltd.

China Daily reporter Hu Yuanyuan interviewed Bob Gibson, general manager of Heng An Standard Life, about the company's business strategy.

Q: Why did you launch the index? And what can it bring to the industry and to life insurance companies?

A: The index will help to better reflect the insurance market trend and customers' real demand. For instance, our survey showed that people with family income ranging from 40,000 yuan to 250,000 yuan and with a graduate degree or above have the highest score of life insurance recognition and are the most willing to buy insurance policies. And those working at joint ventures, private firms, State-owned enterprises and colleges are more likely to buy policies.

Meanwhile, among the 10 cities our survey covers, we were surprised to find that second-tier cities such as Qingdao, Chengdu and Shenyang scored higher than Beijing, Shanghai and Guangzhou. More wealth management channels in the metropolitan cities may be the major reason for their comparatively low scores.

Q: What's in the database, and what are the key indicators of the index?

A: The research was based on 4,870 questionnaires covering Beijing, Tianjin, Shanghai, Guangzhou, Nanjing, Hangzhou, Chengdu, Shenyang, Qingdao and Jinan. We got back 5,492 questionnaires in total - through street talk, mail surveys and on-the-spot interviews.

The index consists of six key indicators, reflecting people's care of others, financial prospects, risk management ability, industry evaluation, demand for insurance and professional suggestions. Those indicators will give us more of an idea of consumers' needs, wants and demands.

Q: Are you going to launch the index on a regular basis in the future?

A: Yes. We will launch the insurance index once a year. And we are going to gradually expand the sample base. For instance, we may cover more cities and improve the index structure next time. Currently, the survey only covers residents of urban areas. But the rural insurance market is also a very important component.

Q: Heng An Standard Life has just set up a new branch in Shenyang. What's the next stop? And what's the company's expansion plan for the next year?

A: We're going to open another five new outlets this year. And our next branch company will be in Chengdu, in Southwest China's Sichuan Province.

In 2008, we'll set up another two provincial branches and 10 sales offices. But I can't reveal which provinces we're looking at.

Q: Statistics from the China Insurance Regulatory Commission show that your premium income more than doubled from 2005 to 2006. Given this rapid earnings rise and expansion plans, are your shareholders planning to inject more money into the joint venture?

A: Yes. That's the plan in the near future. But the exact amount of money depends on our business development. With 1.3 billion yuan of registered capital at hand, we still have enough money to fuel rapid growth.

Q: More and more insurers are turning to the pension business, due to China's aging population. Are you planning to set up a professional pension company?

A: We are very keen to participate in the corporate pension business. But we will start from a pension plan rather than initiating an independent pension company.

The plan, which will be launched on October 15, will be available in all our branches but will be particularly attractive in Tianjin and Jiangsu, where these governments allow tax relief for firms that have enterprise annuity plans for their employees.

There are usually three parts to the pension system - the basic one provided by the State, the second supported by companies and government together, and the third fueled completely by the private sector. What we are interested in is to take part in the middle level.

Q: Standard Life Assurance Co, the British side of the joint venture, floated on the London Stock Exchange last July - the largest transaction in Europe last year. What impact could that listing have on Heng An Standard Life?

A: We will invest more heavily in our China operation. Our business in India has brought in 1 billion yuan in the past seven years, and we expect a similar performance in China's insurance market.

If you take a look at worldwide premiums, less than one-third comes from Asia, with the remaining part mainly coming from Europe and North America. But we believe the picture will change soon, with 50 percent coming from Asia, and 25 percent each from Europe and America.

(China Daily 09/25/2007 page15)