James Tan, who is FPI’s general manager for the Asia, Middle East and Africa operation, said proper regulation would ensure investor protection, which is important for the development of investment-linked insurance products.
"We always make sure our insurance brokers make policyholders fully aware of the risks and other details of the policies before they buy the products. We welcome proper regulation on the sales process," he said.
Earlier this month, the chairman of the Securities and Futures Commission, Carlson Tong Ka-shing revealed that the regulator was in talks with the government to tighten the rules on the products, particularly the sales process.
The products are currently not regulated by the securities watchdog, and salespeople are not required to obtain an SFC licence.
Tan said the real challenge for investment-linked products was not the proposed tightening of regulation but the market volatility.
"We have seen sales of investment-linked products going down in recent months in step with market volatility. Policyholders have been opting for simpler products to pre-empt losses," he said.
Figures from the Office of the Commissioner of Insurance also show that volumes in investment-linked products swing with the market.
Such products issued by Hong Kong insurers reached HK$60bn in 2007, when the Hang Seng Index hit a record high. Sales subsequently fell to HK$15.5bn in 2009, and HK$7.2bn in the first nine months of last year.
Tan told the South China Morning Post that he believes that in the longer term, investment-linked products will continue to grow, as the Asian market has seen an upsurge in the number of wealthy clients. "Our investment-linked policies have over 100 fund choices for customers to pick from," he said.
"We are not AIA or Manulife, which target the mass market, but focus on a particular client segment to focus on their demand," he added.
