Ultimately, the most important measure of success for the reforms that we are now pursuing in the general insurance industry will be how far they contribute towards addressing the protection gap that exists, in turn strengthening our foundations for growth and stability. Today, I would like to talk about how agents have a key role in this process. In a more liberalised environment, insurers will have much greater flexibility in the design and pricing of products based on their respective business and risk strategies. This should encourage pricing that is more aligned to risks (let’s call this point “A”), and place greater power in the hands of consumers to manage the cost of insurance by controlling the risk factors that influence pricing (let’s call this point “B”). This in turn can make insurance more affordable for more people and businesses, especially small businesses. However, interventions by an agent are what effectively connects points “A” and “B”. In a detariffed environment, the number and range of risk factors that determine insurance prices are expected to expand. Consumers will also have more choice on the scope and level of protection that they purchase. Agents, having both direct access to consumers, and intimate knowledge of an insurance provider’s underwriting considerations and products, are best placed to explain the insurance options that are available to the consumer and make recommendations on how to maximize the value of a purchase. A number of things will need to happen for agents to deliver on this expectation.
Trade liberalisation, in its most far-reaching manifestation – China’s prospective entry into the WTO, brings enormous opportunity for Hong Kong to enlarge and deepen its intermediary role. Globalisation is transforming the way in which government and business relate to each other, and Hong Kong is in an excellent position as an open, lightly governed city to take advantage of the process. Technological advance offers new tools to realise the practical benefits of globalisation, particularly in the field of financial services, and Hong Kong is in the vanguard of the innovative work that is going on. 28. But these processes also carry risks and uncertainties, which can be reduced, through hard work and vigilance, but never eradicated. How much business will be diverted from Hong Kong to other cities after China enters the WTO? How should small, open markets like Hong Kong safeguard themselves against the shocks and threats which are transmitted more quickly, more sharply and more forcefully through globalisation? And how, when we frankly have very little idea of where innovation is taking us or of where the dead ends may be, do we cope with the volatilities and unknowns – not least in the financial projections of technology-led companies – of a white hot technological revolution? These are among the many challenges of living in a logistics, financial and digital hub. As one of the world’s most open and connected of cities, Hong Kong is better placed than most to respond to these challenges and to deepen further its role as a global city.