HONG KONG, CHINA - Media OutReach - Nov 22, 2017 - A report released by Zurich Insurance (Hong Kong) today calls for greater collaboration to close income protection gaps -- as half of the local workforce lack sufficient savings to last six months without income.
The global report titled ' Embracing the income protection gaps challenge: options and solutions ', is the culmination of an extensive three-year study in collaboration with the University of Oxford, and provides recommendations for how governments, employers, insurers, intermediaries and individuals can work together on the issue. Hong Kong was among 11 countries/regions surveyed in the global report.
The report also reveals that Hongkongers feel they are most vulnerable to income loss. Only a quarter of respondents believe they have a less than 10% chance of lost earnings due to illness or disability, versus the more confident 38% average of the 11 markets surveyed.
Mr Eric Hui, Chief Executive Officer, Zurich Insurance (Hong Kong), said , "The study highlights a serious issue with income protection gaps in Hong Kong. Income protection is not a pleasant topic, and it's complex, so people often need a trigger to motivate them to act. We hope the report will stimulate debate, and help more people in Hong Kong prioritize income protection, seek professional advice, and formulate a long-term plan."
Hong Kong faces significant protection gaps
The findings from the second phase of the study reveal that Hong Kong workers are more likely (54%) to experience income loss in working life due to serious illness/disability than any of the respondents of the markets surveyed (average 44%).
The research also shows that 54% of those surveyed had personally experienced income loss due to sickness or accident.
Of those that experienced income loss, over one-third ( 38%) suffered income loss for longer than six months . Of those without income protection insurance, less than half (45%) said they would consider investing in protection, with most citing price as the biggest barrier.
Mr Hui, said, "The lack of protection, combined with Hong Kong's increased longevity and rising healthcare costs, presents a significant protection gap challenge for the city."
People working longer increases risks
As people in Hong Kong enjoy a longer life expectancy, with men expected to live to 81.24 years, and women averaging 87.32 years. People are also working longer. This puts individuals at increased risk of becoming disabled during their career.
Mr Hui, said "Chronic sickness, injuries or other conditions can prevent or impair a wage earner's capability. The rising cost of healthcare is also creating additional financial burden for individuals. An income protection gap could seriously deplete household budgets, savings and retirement accounts. Yet, the burden of guaranteeing long-term financial security may be simply too great for many individuals to bear alone."
A collective effort in minding the income protection gaps
Based on the research, Zurich recommends that government, employers, insurers, intermediaries and individuals work together to close income protection gaps. Key recommendations include:For insurers: Develop accessible insurance products to introduce via employers, with additional features available for individuals wishing to purchase them. For employers: Actively promote well-being programs for employees for healthier lifestyles. Partner with the government and employers' associations to encourage return-to-work schemes. Provide employees with ongoing financial education and training, including the use of digital tools. For governments: Regulate and certify (or trademark) approved income protection insurance products and use fiscal incentives to encourage mainstreaming of adaptation. Harness the enthusiasm and efforts of various sectors by promoting collaboration and setting common goals to improve financial education literacy. For the individuals: It is important to consider competing priorities in life and future financial security when reviewing if enough income protection is in place. For insurance distributors and intermediaries: Agents, brokers, banks, employee benefits consultants and others have important roles, not just linking supply and demand but advising and educating customers (whether employers or individuals) and feeding market and customer requirements back to insurers.
The first phase of the project, released in 2015, addressed themes such as how income is protected. The second study published in 2016 looked at institutional and behavioral factors influencing demand for income protection. The third phase of the project, which includes the latest study, investigates potential avenues for how the public and private sectors could work together to close IPGs. Both the second and third phase of the project included a representative sample of Hong Kong respondents -- 1,039 respondents aged 25 to 60 completed an online survey consisting of 57 questions.
Supporting materialsThe full research report ' Understanding income protection gaps: awareness, behavior, choices, 2016 ' Income protection gaps: challenge and opportunity -- Australia, Brazil, Germany, Hong Kong, Italy, Malaysia, Mexico, Spain, Switzerland, the U.S. and UK. The full research report ' Embracing the income protection gaps challenge: options and solutions, 2017 ' Insights and solution for closing IPGs in 12 countries -- Australia, Brazil, Germany, Hong Kong, Italy, Malaysia, Mexico, Spain, Switzerland, UAE, the U.S. and UK.
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With about 54,000 employees, it provides a wide range of property and casualty, and life insurance products and services in more than 210 countries and territories. Zurich's customers include individuals, small businesses, and mid-sized and large companies, as well as multinational corporations. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com .Zurich's presence in Hong Kong dates back to 1961. In Hong Kong, Zurich offers a full range of flexible general insurance and life insurance products and solutions for individuals, small businesses, and mid-sized companies, as well as large corporate customers, catering to their insurance, protection and investment needs.