In a famous Rolling Stones article, Matt Taibbi called Goldman Sachs “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
That perfectly describes most, if not all, of the big multinational insurance companies operating in Hong Kong.
It is probably not possible to precisely determine which of them is the most evil (past or present), but I have ranked them in a few ways that can give us a rough approximation.
I created the above chart using 2013 provisional data recently released by the Insurance Authority.
The reason I chose to rank insurers by regular premiums, as opposed to single premiums, or total premiums, is because regular premium products are typically far more fraudulent, exploitative, and profitable to insurance companies. They are often marketed as “savings plans” and are mainly sold to people who have little or no savings, i.e., the people who can least afford to be scammed.
Some insurance companies openly admit that they focus most of their energy on selling regular premium ILAS products because these products have the highest profit margins. For example, in a recent article in International Adviser, Royal London 360° says it abandoned the low-margin UK market—where abusive regular premium ILAS products have been outlawed—and has shifted its focus to selling these ripoff products in poorly regulated regions where they are still legal, i.e., Asia and the Middle East.
(Outlawed ILAS products include, but are not limited to, those with a 25 or 30 year lock-in and an initial contribution period of 18 to 34 months. The lock-in exists primarily to recoup massive upfront commissions. Commissions are illegal in the UK.)
The following chart was created using 2012 annual data and ranks insurers by the number of regular premium products they sold in 2012 (i.e, by the number of victims they generated). At the right side of the chart, insurers are ranked by the amount of premiums they collected from selling these products.
The last chart was created using another set of 2012 data. It ranks insurers according to how many ILAS policies they have sold throughout history (both regular premium and single premium). This chart only captures polices that are still in-force, i.e., ones that haven’t matured or been terminated.
NOTE: I haven’t evaluated all 265 ILAS products that have been authorized in Hong Kong, but I have evaluated enough of them to know that some policies are much worse than others. Therefore, the charts above are imperfect, as they only indicate which companies sell the most policies, not which companies sell the most exploitative policies. What this means is that, just because Company A sells more policies than Company B, it doesn’t necessarily mean that Company A is more evil than Company B. However, in most case it probably does mean that.
Insurance Jargon Explained
I asked the Insurance Authority to clarify on few unfamiliar terms. I was told that:
“Net liabilities” means the policy reserve set aside by the insurer before reinsurance as at the end of the financial year. The policy reserve will include the amount provided for the value of the units held for policy holders and the amount required to be provided for claims and expenses, etc.
“Office premiums” means (a) for policies with the single payment of premium, the premiums paid by the policy holders during the financial year; or (b) for policies with regular mode of payment, the annualized premiums of the policies.
“Revenue premiums” means the premiums paid and payable to the insurer during the financial year.
According to Dictionary.com, annualize means “to calculate for or as for an entire year”.
So, in the Insurance Authority’s annual data, a regular premium policy sold in December shows up as 1 month of “revenue premiums” and 1 year of “office premiums”.