BOC Life was the best performer among profit-sharing insurance products which successfully met projected targets on non-guaranteed returns.
Less than 40 percent of data presented in local insurance products met the expected non-guaranteed returns, insurance comparison platform 10Life said.
And the fulfillment ratio varied greatly among local insurers, it added.
The fulfillment ratio can be understood as the actual accumulated non-guaranteed benefits against the illustrated aggregate amounts for all relevant policies at the point of sale.
A ratio close to 100 percent means the insurer has come close to achieving its projected non-guaranteed benefits.
If the ratio is higher than 100 percent, it means that the actual payout was higher than the illustrated amount at the point of sale, and vice versa.
BOC Life scored the highest of 9.7 points under a scoring methodology designed by 10Life’s actuarial team, with an average fulfillment ratio of 95 percent and a stable performance across all its data points.
This was followed by AXA and AIA Hong Kong, with Hang Seng Insurance at the bottom of 5.8 points among 12 major local insurers.
The scoring was based on insurers’ 2022 performances for policies in force for six to 10 years or more.
Local regulators require insurers to disclose their fulfillment ratios from 2017 to show how they actually paid out their expected returns, which are subject to uncertainty due to market fluctuations, insurers’ investment performance and their profit-sharing policies.
10Life analyzed a total of 3,290 data points in 640 with-profit products in the market, including savings insurance and annuities, provided by 19 insurers.
Among them, 1,260 data points fully realized the returns projected in illustration documents, which means only 38 percent met or exceeded the expected non-guaranteed returns.
Although the disclosure of fulfillment ratio is required, Dennis Lun, chief executive of 10Life, said the different timing for insurers to update such data, the complicated presentation, and the large amount of data all make it difficult for consumers to understand.
Therefore, 10Life adopted a standardized approach to consolidate all the data and provide scores for each insurance company, Lun noted.
Lun said the transparency of insurance products in Hong Kong still leaves much to be desired.
In Singapore, authorities require every insurer to disclose data such as the historical returns of the with-profits fund, fund management costs, and commissions paid to the sales channels in the insurance policies issued to customers, to help them better understand the expected returns of the insurance policies.
Lun suggests investors choose a specific type of insurance product based on their risk preferences and investment needs, then compare the internal rate of return of such products for different companies and their fulfillment ratios, for a final decision on a suitable product.
Hong Kong United Times丨香港聯合時報丨HKUT 