Different approaches required for different insurers

Where you are now dictates where you will go in the future

For the purposes of RBC, insurers fall into one of three groupings. Their membership of a group is decided by their current circumstances and will decide its future strategy.

Group 1) Insurers who already undertake RBC in Hong Kong
Insurers who are already controlled by RBC somewhere – Insurers who already undertake a form of RBC at Group and country level (usually because they are based in EU / US / Singapore / Thailand / Malaysia or subject to China’s C-ROSS).

Group 2) Insurers with voluntary internal capital models 
Insurers who have chosen to maintain or develop internal economic capital models and manage themselves on that basis.

Group 3) Impact of RBC on Insurers who are new to RBC in Hong Kong
Insurers who are new to RBC – Insurers who have been previously unencumbered, but to whom RBC will curtail their price-competitive growth model.

Groups 1 and 2 should see RBC as an opportunity to become more competitive, whereas Group 3 will have to work hard to maintain their position.  For these insurers, they have four possible futures:

Group 3 options
A) Act now to reduce the negative impact on solvency and reduce risk and range of product suite to ensure continuing solvency.
B) Undertake strategic change, which will include some immediate actions, but will focus on re-shaping the business on new forms of growth beyond competing purely on price.
C) Receive a capital injection to reflect a revised increase in risk.
D) Choose to exit the Hong Kong market.