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Speech by FS at opening ceremony of 26th Pacific Insurance Conference (English only) (with photo/video)
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     Following is the speech by the Financial Secretary, Mr John C Tsang, at the opening ceremony of the 26th Pacific Insurance Conference this morning (October 28):

Mel (Mel Gottlieb), Michael (Huddart), distinguished guests, ladies and gentlemen,

     Good morning.

     I am pleased to join you all at this year's Pacific Insurance Conference.

     A warm welcome to everyone, particularly those who have come from outside of Hong Kong.

     I am also delighted to welcome the Pacific Insurance Conference back to Hong Kong. We last staged this event here 10 years ago, back in 2003, under the theme "Exploiting New Opportunities; Pursuing New Markets".

     Indeed, since then, we have seen new opportunities, new markets as well as new challenges.

     Some of these challenges have been beyond our control. The Asia-Pacific region seems to have been particularly prone to natural disasters somehow, such as hurricanes and typhoons, earthquakes and tsunamis, floods and fires. In many cases, insurance companies have had to settle massive claims resulting from catastrophic natural events of the past decade.

     Other challenges have been largely "man-made", and here I realise that I am so intentionally gender specific that I am making myself appear a little bit politically incorrect. But I do want to be accurate in my description in this case. The most notable of these challenges is, of course, the 2008 global financial crisis, which continues to affect the world economy today.

     With robust regulatory frameworks and sound risk management, the Asia-Pacific insurance industry has been able to maintain steady growth amid these challenges. According to industry data, the total direct insurance premium in the Asia-Pacific Region has grown from about US$1.6 trillion in 2003 10 years ago to some US$2.5 trillion last year.

     I am pleased that we have many distinguished speakers and participants at this Conference to shed some light on winning strategies for the next 10 years. So we look forward to learning more about your insights for the industry and for insuring our next generation.

     But now allow me to share with you some brief observations from the Hong Kong Government's perspective.

     Knowing your client is often regarded as the first rule of doing business. Statistics tell us that future clients of the insurance industry are likely to be older, wealthier and, perhaps, wiser than previous generations.

     According to figures from the United Nations, the proportion of people aged 60 or above in Asia will increase from 11 per cent of the total population in 2012 to 24 per cent in the year 2050. In North America that ratio increases from 19 per cent to 27 per cent by the year 2050. Here in Hong Kong, we estimate that one-third of our population will be aged 65 or above by the year 2041.

     Future generations are also likely to have deeper pockets with the rise of the middle class. While less than one-third of the world's middle-class people lived in the Asia-Pacific region in 2009, the region will be home to two-thirds of the world's middle-class by 2030. That is according to the latest UN Human Development Report. Also, a report released by Ernst & Young in April this year predicts that China's middle class would reach 1 billion by 2030.

     Middle-class families tend to invest more in education so that their younger generation would be better equipped and better informed to deal with life's risks and challenges. They recognise the need to plan early for a happy retirement and prepare for longer life expectancy. The emergence of a so-called "silver hair market" and a bulging middle class creates more opportunities in financial services, such as growing demand for annuities, health and medical insurance.

     Earlier this month, the Hong Kong Government issued a consultation paper on population policy. Among other things, we are inviting the private sector to suggest ideas on ways to facilitate the growth of the "silver hair market". So please do let us have your insights on how insurance can be better placed to address retirement planning as well as health and medical needs of an ageing population.

     The best interests of the consumer must be at the forefront of any winning business strategy. This was one of the lessons reinforced by the impact of the global financial crisis.

     Some advanced economies including the European Union and Australia have mandated "acting in the best interest of clients" as a conduct requirement for insurance intermediaries. Hong Kong is also incorporating this exact requirement into our legislation for the establishment of an Independent Insurance Authority, which will serve as our insurance regulator, independent of government.

     The overriding goal of the Authority will be to ensure that clients have the best information to make the right choices, and that they are sold the most appropriate products to suit their needs. And if there is a conflict of interest, the client should be alerted to the conflict so that they can make informed decisions.

     This, in turn, will boost consumer confidence in the insurance industry and benefit our community as a whole.

     Late American humourist Kin Hubbard once said, and I quote, "Fun is like insurance; the older you get, the more it costs".

     It is no secret that we are all getting older, and we can expect to live longer and healthier lives than our forefathers. Perhaps the biggest challenge for governments, not just here in Asia but around the world, is to lessen the financial burden of an ageing population on our future generations. We need your help. Our goal is to help people enjoy a bit more fun in later life, without sacrificing their own peace of mind.

     And finally I just like to wish you all a fruitful Pacific Insurance Conference and our visitors an enjoyable stay here with us in Hong Kong. And I do hope that you will be able to stay around for our Wine and Dine Festival which will be held later on in the week.

     So thank you very much and have a great day.

Ends/Monday, October 28, 2013
Issued at HKT 11:37

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