Sep
22
Asia’s Middle Class Seeks More Protection
By Marius | Published September 22, 2011
A new research document released this week by ING has found that more than half of Asia’s emerging middle class are planning to buy an additional insurance policy over the next 12 months due to a wide assortment of regional social and economic factors.
The ING Investor Dashboard has been published for the past three years by ING Investment Management as part of their quarterly study of investor confidence and activities among middle-income customers in 11 key markets across the Asia Pacific region, including China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Japan. Starting this year, ING began tracking insurance purchasing behavior and other middle-class lifestyle choices in a parallel study, titled ING Insurance Dashboard. The inaugural insurance survey was conducted in June 2011 and involved online interviews with over 2,300 middle-income investors, aged 25 years and above, from China, Hong Kong, India, Korea, Malaysia, Thailand and Japan. ING used international and independent research firm Nielsen to conduct the survey.
The findings of the ING Insurance Dashboard report, released on Wednesday Sept 21, revealed that 82 percent of all middle income Asian citizens have felt a greater need to protect their lifestyle in the past year due to a stagnant macroeconomic climate, uncertain income conditions and political changes (in Thailand and Japan), amongst other factors. This perceived threat of potential economic downturn has driven many to consider additional coverage options. Over half of all respondents (52 percent) claimed they were planning to buy a new insurance policy sometime in the next 12 months. Among the seven countries surveyed, India appeared the most willing to seek coverage with 85 percent of respondents worried about a lifestyle coverage shortfall and 75 percent planning to purchase insurance soon.
According to the ING Insurance Dashboard report, the top three reasons middle class Asians are saving today are to protect family income and to provide for retirement and their children’s education. These driving factors were relatively consistent across the Asian countries surveyed, with the exception of respondents from Hong Kong and Thailand, who intimated that purchasing a home and starting a business were also prime reasons for saving. The study also revealed that parents across Asia are starting to save for their children earlier, with over 45 percent of Indian respondents starting to save when their kids are between 0 and 3 years old. There is also a growing awareness of alternative insurance and savings plans like takaful and micro-insurance.
ING Insurance Asia Pacific Chief Executive Frank Koster explained in a press briefing that the survey’s results demonstrated how far the average middle class Asian consumer had progressed in terms of insurance awareness and lifestyle expectations. “This is in line with our experience. Asia’s growing middle class is looking for more protection to ensure they can maintain their lifestyles in the face of uncertainty and an increased awareness of the benefits of insurance,” Koster remarked.
The survey’s data also indicated that spiraling healthcare costs (particularly amongst respondents from China, Hong Kong, Malaysia and Thailand), combined with changes in the domestic sphere (China, India, Korea and Malaysia) were driving Asia’s middle income earners to increase their insurance coverage. These changes in consumer attitude towards insurance are all happening incredibly quickly. The survey showed, for instance, that 83 percent of all Malaysian consumers believed that there is now a much greater need to protect their lifestyles now than compared to 12 months ago. Overall, the rise in income, healthcare, education and housing opportunities across most of Asia, has given individuals and families in the region greater access to a lifestyle they would now like to protect.
Elaborating further on the report, Frank Koster said that combined insurance and savings products had become a popular choice for middle-income Asian families looking to address future concerns and a present shortfall in coverage. “Insurance policies with savings plans attached are proving to be the product that meets this demand. These policies are proving to be an accessible and affordable wealth management and protection product, for Asia’s growing number of middle income earners,” Koster noted.
The purchasing habits of Asia’s emerging middle class are already having a profound effect on the global insurance markets. ING cited Swiss Re’s latest sigma study, which showed that life insurance premium volume increased by 13 percent across Asia in 2010, more than doubling the 6 percent growth rate reported for the rest of the world for last year. This trend looks set to continue as insurers begin to introduce more elaborate wealth management products to meet the increased spending power now present in the Asia Pacific region. As more and more middle class Asian families secure a lifestyle and assets worth protecting, their income appreciates and becomes able to afford more robust wealth management and investment services.
The report concludes by saying that the continued rise of the insurance sector in Asia will not only help it’s citizens handle day-to-day issues but could also prove integral to the continued economic and social development for the region as well “People in Asia are obviously interested in looking after themselves and the lifestyle that they lead, and importantly, the opportunities they can create for themselves tomorrow,” Koster finished.
Insurance Companies Mentioned
ING
ING is a global financial institution of Dutch origin offering banking, investment, life insurance and retirement services serving more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia. ING Group is active in banking, investment management, life insurance and retirement services across 14 major economies in the Asia Pacific region, employing over 23,000 staff.
Swiss Re
Swiss Reinsurance Company Ltd was established in 1863 and is present in more than 20 countries. Swiss Re provides reinsurance products and financial service solutions. It offers various reinsurance products covering property, casualty, life, health and special lines – such as agricultural, aviation, space, engineering, HMO reinsurance, marine, nuclear energy, and special risks.
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