On 16 March 2023, the Faculty of Finance of the City University of Macau held the Finance Seminar Series [20] at the Ho Yin Convention Centre. Mr. Yong Chen, Vice General Manager of Tahoe Life Insurance Company (Macau) Limited, was invited to deliver a speech titled “Breakage and Reform of Life Insurance Industry”. Guests attending this seminar include Dean Adrian Cheung, and Associate Dean Eva Khong of Faculty of Finance, City University of Macau.
Mr. Chen Yong is a Financial Risk Manager, Senior Professional in Human Resources, Project Management Professional and Certified Anti-Money Laundering Specialist. He has more than 20 years of working experience, and has served in the Bank of China, Allianz Insurance, MetLife and other fortune 500 financial and insurance groups. His work area covers corporate governance, corporate strategy, human resource management, risk management, legal compliance, etc.
Mr. Chen first explained four key factors that bring opportunities and challenges to the life insurance industry: increasing personal risk awareness and uncertainty of relying on social public welfare; Rising nominal interest rates bring short-term benefits, but real interest rates are likely to remain low for long-term; The impact of technology is growing; And the rise of Asian economies and renewed geopolitical risks. Then, Mr. Chen discussed the current situation of the life insurance industry: disappointing performance, the declining importance of the industry; The transfer of the source of value; And big structural changes are taking place.
Mr. Chen described how insurance companies should shift their focus in the near future, and how different insurance business models will illustrate the best way for insurance companies to target investors. Traditionally, life insurers have created profits and growth by identifying attractive products and markets and bridging the end-to-end value chain to support those products and markets. Therefore, ownership of large segments of the value chain helps streamline operations and control the end-customer experience. The changing structure of the industry will create new opportunities in terms of where and how insurance companies create value, thereby increasing the importance of the life insurance industry to consumers and its appeal to investors. Insurance companies should properly plan their route in the process of reform and choose their own value creation mode according to the organizational goals and investors' expectations.
In conclusion, Mr. Chen predicted that the life insurance industry will continue to face challenges in the next few years, including returns after deducting the cost of capital and geopolitical risks, as well as new uncertainties and challenges such as high inflation and a volatile macroeconomic environment. Nevertheless, insurance companies can explore, invest and leverage their strengths to meet the expectations of shareholders and stakeholders and create a positive outlook. The industry realignments also allow insurers to transform their areas and methods of value creation to overcome current performance challenges.
At the end of the sharing session, the students took this valuable opportunity to actively pose questions related to the current situation of the financial market, and enthusiastically communicated with Mr. Yong Chen, expressing their hope to learn more information about the future risk management field. Mr. Chen answered in detail, and suggested that the students seize the time to enhance their knowledge and obtain CFA, FRM and other qualifications. The Seminar helps students to learn more about the opportunities and challenges facing the life insurance market and how to deal with them, which helps them grasp the development prospects of the life insurance industry. The students also expressed their expectations for the finance seminars in the coming semester.