In the AIA Group's US$4.034 billion new business value (VONB) in 2023, AIA Life, which carries the group's Chinese mainland business, is a significant contributor. According to the financial report, the value of AIA's new business increased by 20% to US$1.037 billion, ranking second among all business segments of AIA.
"I believe that AIA Life, which represents the Chinese mainland market, will be the largest contributor to the new business value of our group in the future. Chen Rongsheng, regional CEO of AIA and chief distribution officer of the group, said in an exclusive interview with the first financial reporter recently.
Optimistic about the mainland market to become the largest contributor to the Group's VONB
According to the performance data, AIA's new business value in 2023 increased by 33% year-on-year, and the annualized new premium increased by 45% to a record high of US$7.650 billion.
Among them, AIA's Hong Kong business and AIA's wholly-owned subsidiary in Chinese mainland, AIA Life, are the two largest contributors. AIA's Hong Kong business achieved a new business value of US$1.43 billion, up 82% year-on-year, driven by the explosive growth of mainland visitors and the growth of its customer base in the local market in 2023, while AIA Life's new business value increased by 20% to US$1.037 billion due to the growth of the agency and bancassurance channels, of which 28% year-on-year increased from February to December 2023 due to the weakening impact of the pandemic.
Although AIA Life still ranks second in the new business value of the group, Chen Rongsheng told reporters that it will become the largest contributor to the new business value of the group in the future.
The logic he gave was the incremental growth of AIA Life through regional expansion in the Chinese mainland market, and the still low insurance penetration rate in China.
With the help of the favorable policy of further opening up China's financial industry, AIA's business in Chinese mainland was restructured into AIA Life Insurance in 2020, and it tasted the "head soup" of wholly foreign-owned life insurance companies in mainland China. Since then, AIA Life has started the pace of geographical expansion in the mainland, and new branches have been approved for establishment or reconstruction in Sichuan, Hubei, Hebei, Tianjin, Henan and other provinces and cities.
"After the restructuring, our business area has expanded from 5 provinces and cities in the past to 10 at present, and I believe that there will be opportunities to expand one or two new provincial branch licenses every year. Chen Rong claimed.
These new regions have resulted in significant growth for AIA Life. According to financial data, in 2023, AIA Life will achieve a 60% increase in manpower in new regions, and a 77% increase in marketing recruitment. At the same time, Chen Rongsheng introduced that the new region created 55% of the new business value growth of the marketer channel in 2023, which contributed about 5% to the new business value of AIA Life's marketers in 2023.
However, in the past, AIA Life was mostly concentrated in first-tier cities, and now most of the new markets are in second-tier cities.
In this regard, Chen Rongsheng explained: "AIA Life's target customer groups are concentrated in the middle class and above, and there are many target customer groups in second-tier cities, these customer groups have relatively high savings rates, they not only have security needs, but also gradually believe that long-term savings and pension insurance is a very good long-term savings channel, combined with the current insurance depth of less than 4% in Chinese mainland, so we are very confident in the future development of insurance business." Chen Rongsheng said.
Chen Rongsheng said that AIA Life will still make some adjustments to its product strategy in second-tier cities, such as lowering the minimum sum insured for the same product in second-tier cities compared to first-tier cities, so as to match the differences in economic development between different cities.
"The Chinese mainland market offers significant growth potential for AIA in both existing business areas and new geographies. So I'm very optimistic about the prospects of my friend Bang Life. According to him, in the first two months of this year, AIA still achieved double-digit growth in new business value in the Chinese mainland market.
Seize the development opportunities in the Greater Bay Area
As an important engine of China's economic development, the Guangdong-Hong Kong-Macao Greater Bay Area has unique geographical and policy advantages, providing a broad space for the development of the insurance industry.
"We are very optimistic about the opportunities that the GBA will bring to the insurance industry. Chen Rongsheng said.
What he observed is that, on the one hand, mainland consumers are still enthusiastic about buying insurance in Hong Kong, and on the other hand, Hong Kong residents are also shopping and applying for insurance in the mainland. Under this cross-border flow, the progress of cross-border insurance in the Greater Bay Area has always been a concern of the industry.
At present, the cross-border auto insurance business has been implemented in the Greater Bay Area, and under the policy of "equivalent first recognition" of cross-border auto insurance for "Macao cars going north" and "Hong Kong cars going north", Guangdong, Hong Kong and Macao have realized "three policies and one place purchase". However, in the broader context of Cross-border Insurance Connect, regulators say it is not yet ripe to start a pilot.
"Cross-boundary Insurance Connect" means that Hong Kong and Macao insurance institutions are not required to establish a commercial presence in the Mainland, and can directly sell insurance products to mainland consumers across the border. The State Administration of Financial Supervision explained last month that this is in conflict with the requirements of the Insurance Law of the People's Republic of China for insurance business operators and the requirements for domestic insurance insurance. In addition, the insurance regulatory policies, product rates, and product sales policies in Hong Kong and Macao are quite different from those of the Mainland, and the sale of insurance products in the Mainland without a commercial presence may not be conducive to protecting the legitimate rights and interests of consumers. Therefore, it is not yet ripe to carry out the pilot directly at this stage.
"We are looking forward to the next steps on cross-border insurance in the GBA. Judging from the current situation, cross-border insurance service centers may have a better chance of realization. Claims settlement through this service center is the first step out of cross-border insurance. At the same time, we also look forward to achieving regional complementarity in healthcare, elderly care and other services in the Greater Bay Area. Chen Rongsheng said.
In fact, the "Greater Bay Area Insurance Service Center" is in the process of being stepped up to land. The State Administration of Financial Supervision said that in the early stage, it had organized special forces to carry out on-site research, solicited and listened to relevant opinions many times, and studied and formed a work plan. After that, we will speed up the relevant work and strive for the early establishment of the insurance service center to provide after-sales service for mainland residents in the Greater Bay Area who legally hold life insurance policies in Hong Kong and Macao. However, at present, the above-mentioned cross-border insurance products are purchased by insurance consumers from local insurance companies, and do not involve cross-border sales.
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