Finding Positivity and Opportunities under COVID-19 – report from Hong Kong

It has been a rough start to the Year of the Rat for Hong Kong since the spread of the novel coronavirus (COVID-19). Constant news feeds and social media opinions on the latest updates have kept everyone on alert. People were queuing up overnight for face masks and hand sanitiser. Rumours about shortage of toilet paper sparked a panic buy which left shelves empty.

As of 25 February 2020, around 0.001% (85 infected cases) of the Hong Kong population have become victims of the epidemic of the disease, whilst almost 100% of the population have become victims of the epidemic of anxiety.

It takes a positive mindset to remain sane amidst all the chaos, and just like all crises in history, there are lessons and opportunities coming out from this.   

 Changing Work Life  

To minimise the potential community spread of the virus, businesses along with government departments have arranged for some or all of their staff to work from home. This has proved to be a challenge for those who lack offsite/online access to essential systems, causing some businesses to scale back or even cut their services. Regardless of the presence of business continuity and crisis management plans, there is a push to make use of online meeting tools to communicate with colleagues and clients.

While some are still getting used to this new work pattern, others are reporting higher efficiency and productivity as they do not need to worry about the commute time and risk of contracting the virus. This is a test case for technology and risk management readiness, and may pave the way for “flexi work life” to become more common for Hong Kong.              

Increasing Insurance Awareness

The COVID-19 scare has caused people to be more health conscious and risk adverse. Many have been thinking about their insurance protection needs, but for most Hong Kong insurance products the coverage against COVID-19 is limited. Health insurance mainly covers private hospital expenses but currently all COVID-19 patients are being treated in public hospitals. COVID-19 is also not a defined disease covered in critical illness insurance, unless it leads to other complications (e.g. terminal lung disease).

The exception to this is pure life insurance products where there is coverage on COVID-19 related deaths. In the past pure protection products have not been pushed by the intermediaries due to the relatively low premium and commission. However, awareness and demand build up may change this.

In the meantime, many insurers in Hong Kong have launched special campaigns on COVID-19 related coverage for both existing and new customers. These include daily hospital cash and/or one off cash payment in the event of COVID-19 diagnosis, compulsory quarantine cash benefits and death benefits. Since these are essentially free additional benefits, most offers have a limited time frame of 3-6 months.    

Changing Customer Preference

Traditionally the majority of the insurance sales in Hong Kong are conducted through face to face via tied agents, banks and brokers. However, these traditional sales channels started facing a downward trend since August 2019 due to the social protests in Hong Kong. Now with the COVID-19, customers and prospects just want to avoid meeting the intermediaries. Additionally, various agents from prominent insurers were caught on social media ushering mainland Chinese customers to Hong Kong before the compulsory quarantine in early February. This has further put local customers off due to the perceived additional risk of infection.

Meanwhile the digital insurance channels are benefiting from the situation. The few digital insurers in Hong Kong have reported more than doubling of sales since the start of the COVID-19 scare, while traditional insurers have also reported increase in customers using electronic platforms for claims and other policy transactions. The Hong Kong Insurance Authority has also just announced temporary measures to waive the face-to- face sales procedures on certain insurance products. Once customers get used to doing insurance online this can become a longer term habit. 

The Future

The COVID-19 looks to be the disruptive factor to drive protection needs and a shift to digital communication and insurance sales platform. In the short term, anxiety will remain as the extent and impact of the disease is still unclear. As actuaries and leaders, we have the responsibility and skills to navigate through uncertainty with sound judgement, despite all the negative news around. By keeping a healthy body and mind we can focus on the positive, and opportunities for the present and the future.

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