The Asia-Pacific region’s high net worth individual (HNWI) wealth is predicted to surpass US$42 trillion by 2025, according to the Capgemini 2018 Asia-Pacific Wealth Report, powered largely by emerging markets like India, and will witness a massive generational transfer of wealth.
This generational transfer of assets across Asia is triggering more individuals and families to establish wealth preservation plans. Among the core instruments available for the ultra-wealthy, sophisticated insurance structures can match a myriad of demands while addressing delicate issues such as inheritance and succession planning.
The Asset recently spoke with Nicholas Kourteff, Chief Executive Officer at Transamerica Life (Bermuda) Singapore, for an overview on the state of high net worth insurance offerings in Asia.
The Asia-Pacific region fueled the global HNWI population and wealth growth in 2017, generating 41.4 percent of all new global HNWI wealth, according to the Capgemini report.
Out of that, the emerging markets – primarily Southeast Asian markets as well as India, accounted for more than 50 percent of new wealth generation.
While specialist insurance players operate in many Southeast Asian jurisdictions, the needs of the HNWIs are complex and unique to that segment. For these HNWIs, Hong Kong and Singapore remain favored destinations due to their more developed capital markets, established professional service providers and international connections.
Nicholas Kourteff expects to see continued growth in universal life products for the HNW segment in the region given they provide lifetime coverage and have the ability to accumulate cash value. “We expect the demand for universal life products to continue across Asia driven largely by the wealth protection and estate planning needs of these HNWIs,” he says.
According to Kourteff, Transamerica Life Bermuda, which is based out of Hong Kong and incorporated in Bermuda with a branch operating out of Singapore, is unique in the sense that the company is solely dedicated to servicing the life insurance needs for the HNWI market.
Given its business focus, Kourteff says the firm has accumulated substantial expertise into the needs and desires of HNWI customers and is utilizing those insights to develop innovative tailored products and initiatives to service the growing population of HNW individuals in both wealth hubs.
“An example of this is our Universal Life Alpha product, which won the firm a leading industry award in 2018 as new product of the year,” says Kourteff.
As Asia’s wealth transitions a new generation of HNWIs is on the rise, signaling a shift in mindset and wealth management priorities towards liquidity and returns, and to insurance as a wealth creation tool.
Unlike traditional HNWIs (age 55 and above) in Asia who have built their wealth through business, the new generation of HNWIs (age 31 - 50) may be more likely to have built their wealth through investments.
“In the current volatile and less certain economic environments, the incoming generation may look to balance their preference for returns with much needed liquidity and stability,” he adds.
Traditionally, succession planning has been dominated by time-tested means, such as wills and trusts. However, as complexities arise from increasing global regulations and taxes, HNWIs in need of fiscal optimization are progressively seeking alternatives that could ensure an unscathed wealth transfer to their successors.
In such an environment, universal life insurance is increasingly seen as a beneficial alternative. In response to this and based on consumer insights gleaned from extensive research into HNWIs, Transamerica Life Bermuda launched the Universal Life Alpha (ULA) product in 2017.
Specifically designed to meet the individual needs of the new high net worth (HNW) generation, ULA offers, amongst other benefits, competitive pricing, high flexibility, and long-term cash value growth potential. The new HRW generation often values these attributes when considering universal life policies for estate and business succession planning.
However, the rising competition brought on by online-only-based insurers and other insurtech driven challengers has made Kourteff feel a little nervous. “We are actively developing digital capabilities to ensure we remain competitive and provide the most up-to-date products and services for our policyholders,” says Kourteff.
Over the last year his firm has invested heavily in updating its IT infrastructure, streamlining processes and digitizing systems to speed up turnaround times to enhance the overall customer service to both clients and intermediaries.
“HNW life insurance is much more complex than traditional retail life insurance and very often involves multiple parties including private banks, brokers, and insurance companies,” Kourteff says.
“Because of this, it is imperative that we continue to develop new ways to drive more value to the customer allowing for more transparency and greater value,” he adds.
Kourteff says that with the rising demand for protection and legacy planning solutions through its universal life product offerings, his firm will develop more product offerings to include other types of insurance products specifically developed for the HNW insurance client.