Taipei Times: Can you briefly describe ING Antai Life Insurance and the role it has played in helping develop Taiwan's life insurance industry over the past 14 years?
Patrick Poon (
PHOTO: CHIANG YING-YING, TAIPEI TIMES
We didn't [invent] these practices, as many foreign companies abroad had already been implementing them. But in the Taiwan insurance market more than a decade ago, every insurer was in consensus that policyholders should have uniform premium rates, which I think was only good for the companies involved.
Through the years, we have done a lot to help make the change in terms of creative products and professional services. But more importantly we have made life insurance a very interesting industry for young people to find a career in.
It's not easy because life insurance is a very difficult product to sell and in the past not many people wanted to join this industry. In the past the situation was always that if you couldn't find a job elsewhere then you would finally go sell life insurance [laughs].
TT: How tough is the competition in the domestic life insurance industry?
Poon: I think the competition exists on the competition's turf. I don't see any competition [for Antai] at all. Basically, the life insurance industry has plenty of market potential in Taiwan because many people here still don't have enough life insurance. But if you are actually not creative and are only doing things that the others do, then you'll see a lot of competition.
TT: When ING Group decided to acquire Aetna Financial Services and Aetna International in 2000, it was a major event in the financial services industry. What was the synergy for the acquisition?
Poon: Following the announcement of the acquisition, the Taiwan branch of Aetna Life Insurance Co of America was later combined with the Taiwan branch of Life Insurance Company of Georgia and became ING Antai Life Insurance in 2001. Basically ING sees the value Antai in Taiwan has in the management team. ING is a large multinational group and is the biggest life insurance company in America -- but its presence in Asia is lacking. So acquiring Antai will make them a significant player in this region. Now ING is the No. 2 life insurance company in Asia.
As for Antai, the acquisition is good in the sense that Antai is now backed by a large, strong financial institution like ING with rich resources in research reports and technology platforms. With a new team and new [energy], we are convinced we will attain our goal of becoming the No. 1 life insurance company in Taiwan within four years.
The acquisition also bodes well for both firms in the China market. While ING is a multinational company and [therefore] qualified to enter the China market, without adequate knowledge of Chinese people and culture it cannot be successful there. But with a solid base like Antai in Taiwan, ING is able to know more about the Chinese market before they really set foot there. It's a good marriage.
TT: What impact will Taiwan's WTO accession have on the domestic life insurance market?
Poon: In fairness, during the last 15 years Taiwan has gradually been deregulating its financial services industry with foreign players relatively free to enter the nation's banking, securities and insurance sector by 2001. Local companies have to improve their operations quickly in order to compete against the new foreign competitors. But I think it will still take a [great deal] of time to see the impact because the [move] of Taiwanese customers to foreign insurers may not happen that fast. After WTO entry, if a foreign company still behaves like a foreigner then it may not have attained the quick success it expects. So the entry may not have a big impact on locals.
But on the other hand if locals still manage like they did before in terms of a lack of transparency, poor financial controls and minimal training for their people, then they will not be able to stay in the market.
TT: What's the impact of China's WTO accession on foreign life insurers doing business in China?
Poon: China's WTO entry will bring many changes, and perhaps present foreign financial insurers with new investment opportunities in that market. According to China's WTO timetable, any new company starting operations in China has to do it on a joint venture basis. They have to form a joint venture with a local insurance company; that will ensure the foreign company shares its technology, experience and professionalism with the local partner.
While currently there are only several cities allowed to open the market, such geographic constraints will be removed three years after China's WTO accession. However, there's a tricky thing here. Although there will be no restriction on where you can start a business, you still have to apply to receive a license and that involves a lot of procedures. The length of the license depends on how efficient the Chinese government is.
On the surface China is definitely a market with great potential, but to [use] this potential requires a lot of work and effort. In terms of population, China is the largest country in the world, but the questions are, first, are Chinese willing to buy and secondly, where are they going to buy from? Actually, Chinese people may trust a local company more than a foreign company.
TT: What are the strengths of Taiwanese life insurance companies entering the China market?
Poon: Nowadays every industry, not just the insurance industry, has an increased risk in business. Although profits are shrinking as a result of lower interest rates, still, you have to have a profit projection that is better than your competitors. But because making profits are important for insurers' future investments, everybody thinks of China because their market is just beginning. China will be a very good market for Taiwanese life insurance companies to invest in because it does not demand high professional standards compared to other countries. The strength of Taiwanese insurers lies on a similar language and culture that both sides share. Though not exactly the same, it seems easier for Taiwanese to understand the difference. And the way of government legislation and regulations is quite similar across the Strait, which allows Taiwanese companies to adjust better. Also Taiwan is near China, making it convenient for companies to transport people and resources there.
Because we're in the financial services business, it's very important to understand people's mindset so as to build a good image with customers. In this respect, it's easier for Taiwanese than foreigners in the China market.
TT: So, no risk for Taiwanese insurance companies in China?
Poon: The business is there but it may not be available to Taiwanese companies. With geographical, cultural and language advantages, Taiwanese companies think it may be more prosperous to go to China, but it is a perception and may not be true because there are so many things that could affect profits.
As a matter of fact, it is also very difficult for Taiwanese companies to receive a license to operate in China. If you do, the Chinese government may have some restrictions on your business [because] they want to protect their own financial companies. They may be allowed to operate in one or two places in the beginning, but once they want to apply for an expansion, it may take a long time for Chinese authorities to approve.
TT: When did Antai first set foot in China and what have you accomplished thus far?
Poon: We received Chinese government approval to set up a representative office in 1991 and started out a venture business -- Pacific Antai Life Insurance Co (太平洋安泰) -- with China Pacific Life Insurance Co in Shanghai in 1998. So far the business is good and Pacific Antai has emerged as the second largest foreign life insurance company in Shanghai.
Actually, because of our past experience in running a business here -- which makes us very much a Taiwanese company -- we have had a very sharp learning curve in the China market. Although we were not the first foreign insurance company to enter China, we know Chinese culture and have special technology for that market, which many foreign companies don't have.
TT: Will China continue to be a focal point for ING Antai?
Poon: As an international group ING is operating in big countries with substantial economic power. We don't want to waste time in small countries. China, of course, is a big economic power that we cannot ignore. But we can not say we are only focusing on China. Many other countries are still important to us.
TT: Are you concerned about future competition with other life insurance companies in China?
Poon: Not at all. Antai is very successful in the Taiwan insurance market. Compared to other foreign life insurers doing business here, we are much better than all of them. Together with local companies, we rank No. 4 among some 30 insurance companies in Taiwan. So if we can beat them here, we can beat them in China, too. As a part of the ING family, we are stronger than ever and wish to compare ourselves with the best life insurance companies in the world, not local competitors.
But since China is a very big market, there definitely are other companies who may go to places where we don't.
They may be successful in the beginning, but we will catch up with them in the long run. Again, we were not the first insurance company to get a license to do business in China, but we are not really worried about going to places late because we know we have something special to offer.
In addition, we have spent a lot of money training people and in establishing high-class services for our customers. I don't see many competitors who are doing this.
TT: Will the relocation of experienced staff and insurance agents to China cause a serious shortage of skilled manpower back home in Taiwan?
Poon: Companies usually make decisions involving people based on the best way to use their resources. Therefore, if a Taiwanese company decided to transfer an employee to China, it was because they know the staff will be more effective in China than in Taiwan. I don't think the personnel relocation will pose a big concern for companies.
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