The main drivers for Hong Kong’s potential as a maritime insurance hub are location, China and shipowners.
There is a maritime focus already and clients are close at hand. As the world moves east to Asia then so will shipping services, and insurance is a natural addition to all of the other needs of a thriving shipping community.
There is a huge policy push supporting shipping in China, which is impressive to say the least. Shipping is being supported by government policy and the leasing houses are doing a fantastic job. China is a major global player in shipbuilding, shipowning and legal services, so insurance will just follow on.
Any support to insurance companies will only serve to help – the margins can be fine between making and losing money, so whatever gives underwriters a competitive edge must help. I do think, however, that care should be taken to ensure that in parallel to the financial incentives being offered by China and Hong Kong, there is also more of a focus on education and working experience for the local maritime insurance sector.
Currently, I think that too many overseas offices in Asia are simply ‘post boxes’ for maritime insurance business to be sent back to London or Oslo for example. Risk should be retained locally to focus on rating levels and exposure.
Support from China is of immense importance. Chinese banks are funding huge projects and where possible there should be requirements for insurance to be placed locally.
I think Singapore and Hong Kong have their own distinct advantages and that both will become increasingly dominant in the insurance sector. The main issue is that there are shipowners in both locations (Singapore and Hong Kong), and as buyers of insurance supported by Chinese banks, they can dictate where their cover is placed.
I think that it is important for local companies, with government support, to be prepared to lose money. That sounds strange, but confidence and an ability to take risks without fear are part of the process; and provided the experience of losing money is used properly, the insurance sector will develop.
You learn fastest when you have a problem. Even if that problem causes a loss, the education it creates will, if correctly used, add to the foundations for a thriving insurance sector.