Year 2007 - Critical Success Factors

experience for agencies operation, it will attract quite a lot of the well-managed practitioners to invest in the Mainland market. Apart from the investment, they shall also bring in the best practice model and kind of the agency management model to China. The current status of the insurance intermediaries can also be raised in the short run. Adaptiveness China is a vast country with huge population, long history, deep and diversified cultures.When compared with some foreign investors, the personnel fromHong Kong has been living in a multi-cultural environment would be more willing to learn and adapt to the local cultures in different provinces in the Mainland. Established Systems The experienced insurance intermediaries in Hong Kong have become part of the management system developed by international insurance companies. They would like to introduce the management system to China through education, training, demonstration and motivation with persistency and determinations. This will generally improve the quality of the insurance agents and the distribution channels in China. New Services Customer centered need-based selling are being introduced into the China market. New product development directions like investment-linked insurance plans, retirement plans, health plan are becoming popular. On the whole, the industry is incorporating the concepts of financial planning for individuals in China.The Insurance intermediaries have well founded experience in both the general business and long term business developments in Hong Kong, the CEPA IV will certainly open the path for the further development of the industry in China. Rule of law The Hong Kong personnel provide products and services based on contract terms and legal basis. As the China insurance market becoming more opened, the relationship-based ways of doing business would gradually change to rule-based competitions. The Hong Kong personnel would introduce modern, systematic and market driven practices into the insurance market. Wholly owned enterprises Recently, quite a lot of foreign insurers have invested into some local insurance agency companies. However, they are limited by the maximum 24.9% of capital participation.All the Insurance Agency enterprises under the CEPA IV will avoid the problems of capital injection and management for most of the joint venture enterprises in China currently. I personally believe that the demand for the intermediaries as a kind of distribution channel will have mounting demand in the near future for most of the insurers, especially to the foreign insurers in China. Most of the foreign insurers are still suffered from the speed of development in sales channels in China. The development of professional tied agencies is still expensive for most of the foreign insurers. The Hong Kong insurance intermediaries can try to fill in the gap. Difficulties: A different market China is a vast market with full of potentials for the insurance business. There are plenty of rooms for intermediaries from Hong Kong to explore.Their experiences and skills would influence the future development of the insurance markets. However the personnel from Hong Kong must not have the “great-Hong Kong” ideas: that is to transplant the Hong Kong model to the Mainland market. The scale and scope of operations would be much larger than what we experienced in Hong Kong. Quite a of international companies has invested large sum of capital and human resources in the Chinese market without success yet. The main difficulties are: Market share concentration In 2007, the foreign insurance companies gained 7.8% market share of insurance premium. Among the Chinese insurers, the business mainly concentrated on the hands of the big 5: China Life, Pinqn, CPIC, Xinhua and Taikong. It needs huge efforts in education, advertisement and marketing for the international companies and their intermediaries to build up trust in the insurance market. For the insurance intermediaries, we will avoid the heavy production 20 Feature