Mr Tan Hak Leh, Regional Chief Executive, AIA Group
Ms Wong Sze Keed, CEO of AIA Singapore
Distinguished guests
Ladies and gentlemen

1. Good morning. Thank you for inviting me to join you today.

2. Let me begin by congratulating AIA on the official launch of the AIA Wealth Centre and AIA International Wealth.

Background

3. This is a key milestone for AIA, which has already had a rich history in Singapore. Just shy of a century ago, AIA set up its first branch office here in 1931, and this grew to become a regional office in 1948National Library Board, Singapore Infopedia, “American International Assurance”. https://www.nlb.gov.sg/main/article-detail?cmsuuid=e24123cd-9cd1-42cb-81c0-2067f9b6085e#:~:text=First%20established%20in%20Singapore%20in,in%20the%20Asia%2DPacific%20region.&text=The%20American%20Asiatic%20Underwriters%20was,Shanghai%2C%20China%2C%20in%201919 .

4. In many ways, AIA’s growth story mirrors that of Singapore. AIA was amongst an early group of pioneers which identified, and acted upon, the opportunity to offer health insurance in Singapore and the region in the 1950s. At the time, Singapore’s population was only a fifth of what it is today and the concept of health insurance was still in its infancy.

5. Over the last nine decades, both Singapore and AIA have grown steadily. Today, AIA services 18 markets in the region, providing coverage amounting to US$2 trillion to people across Asia.

6. Today’s launch marks the establishment of a dedicated wealth advisory business within AIA Singapore. This is a timely development, given the growth in wealth, a rising middle-class with strong spending power, and robust business expansion in the Asia-Pacific. By some estimates, household wealth in the affluent and high net worth segment in the Asia-Pacific is estimated to expand at an annual rate of 8.3% from 2021 to 2026KPMG, 2023, Growing in a turbulent world: Finding the next growth engine in APAC asset management..

7. Amidst this rise in affluence, intergenerational wealth transfer is expected to take place on an unprecedented scale in the coming years. A growing affluent and high net worth segment will require tailored wealth protection and legacy planning solutions, as well as platforms where individuals are able to have their investment, succession and impact goals met by highly-skilled and knowledgeable professionals.

8. To meaningfully tap on this growth opportunity and meet the needs of their clients, the insurance industry will need to double down on – and invest in – three areas: products, philanthropy, and people. Let me cover each of these in turn.

Products

9. The first area is products. The best products are those that meet needs and unlock value. The affluent and high net worth segment have complex and multi-faceted needs, including ensuring financial provision for their family, preserving the continuity of the businesses that they have built up over a lifetime, and planning a meaningful distribution of wealth.

10. Clients in this segment typically have bespoke wealth preservation, protection and distribution interests in view of their varied personal circumstances. Insurers will need to have a deep appreciation of these needs, and develop relevant and well-structured products.

11. The further complication is that this is not a static picture. These client needs will evolve over time, and sometimes quite quickly. Many increasingly want to leave a legacy and ensure that their wealth has broader impact. Beyond family wellbeing and the preservation of businesses, these individuals will seek to include elements in their wealth distribution plans to support causes that are important to them.

12. Clients are also increasingly seeking out products that combine insurance coverage with the ability to take advantage of market upsides and returns. Some are sophisticated investors who want flexibility to choose investment options, based on their read of opportunities in the market.

13. While it is not always easy to meet a range of interests and needs, life insurers like AIA are uniquely positioned to offer a broad suite of products and services to high net worth and affluent individuals that address all stages of the wealth lifecycle – accumulation, protection and distribution.

14. To achieve this, life insurers’ wealth businesses will need to convene the right capabilities across their group. For example, AIA International Wealth can leverage the capabilities of AIA Investment Management, which manages US$133 billion worth of assets across asset classes and geographies.

Philanthropy

15. This brings me to the second area that the wealth management sector needs to pay attention to – philanthropy. The need for this will only grow as wealth is being transferred from first generation to second generation owners, as the younger generation of wealth owners have, in addition to wealth preservation priorities, a strong desire to do good with the wealth they have inherited.

16. There is scope for insurers to consider how wealth protection and legacy planning solutions can include a philanthropic dimension. The incorporation of philanthropy within high net worth insurance solutions is nascent and under-developed, which also means that this area is ripe for scaling and innovation. Client interest and demand are growing, and solutions are needed.

17. Possible solutions include multi-decade endowment plans for charitable foundations to support their work over a longer term. Another example is the gifting of life insurance policies by wealthy individuals to charitable causes. The use of life insurance in philanthropic giving magnifies the financial impact of the gift, as the proceeds that are ultimately gifted are significantly larger than the premiums paid.

18. There is scope for innovation here, and we are starting to see some new solutions in the market. These include solutions which enable death benefits to be paid out to charities over a longer period, and which include upfront philanthropic giving upon the inception of universal life insurance plans.

19. The provision of new products and philanthropy solutions will need to be twinned with new advisory services. For example, clients who have a desire to support sustainability philanthropy and investments may need support on various fronts. This includes having access to a trusted, vetted pipeline of investment options that strongly promote sustainability goals. Across both sustainability and investment, clients will also want to more effectively assess and track impact and sustainability performance criteria. AIA can build capabilities in these important areas and work with partners with the relevant expertise, many of whom are based in Singapore.

People

20. The third area of investment is people. Insurers seeking to grow their high net worth businesses will need a trusted, high quality talent pool. This will be a talent pool that is equipped with technical product knowledge, relationship management skills, and a deep understanding of the needs and wealth management goals of their clients. Specific technical skills that financial advisors will need include family governance and succession planning, asset management across a range of asset classes; tax planning and trusts; as well as philanthropy.

21. In addition to these specific skills, we will need to develop talent that is digitally savvy.

a. Insurers are continuing to harness the benefits of digitalisation, particularly data analytics and artificial intelligence. AIA is leveraging data analytics to gain a deeper understanding of clients’ bespoke needs, and using machine learning to assist in complex underwriting decisions, through the automated analysis of medical reports.

b. Looking a few steps ahead, Generative AI tools will offer insurers even more opportunities to automate part of the underwriting process for the affluent and High Net Worth segment, which is typically more rigorous and complex than retail underwriting, due to the large sums assured.

22. Besides digitalisation, jobs in this sector will also be transformed by the growth of sustainable finance. This was one of the findings of the Sustainable Finance Jobs Transformation Map, which was recently launched by MAS and the Institute of Banking and Finance (IBF). Financial advisors will need to understand and advise their clients on the climate risks and sustainability impact of their portfolio, and how this aligns with sustainability goals of both the client and the insurer. Product development specialists will need to incorporate sustainability considerations in the development of insurance based investment products to cater for the growing demand. Underwriters will need to assess sustainability risks for new sustainability wealth protection products. All of this will require massive amounts of upskilling and reskilling.

23. To address this and provide some support to the industry, MAS has set aside S$35 million in the Financial Sector Development Fund to support upskilling and reskilling, and develop specialists in sustainable finance over the next three years. The IBF is also working to expand the availability and quality of accredited training courses, beyond the more than 100 that are available today.

24. More generally, the MAS and the IBF offer a broad range of courses that insurers can tap on. These include training to enable mid-career professionals with no prior experience to take up wealth management roles in the financial sector, and training that supports the acquisition of tech skills at any stage of one’s career. The Wealth Management Institute also offers programmes on the role that insurance plays in the wealth management needs of high net worth clients, uncovering clients’ complex needs, and how to support clients well during challenges and crises.

25. We’ve laid out the building blocks and supporting structures for a financial sector that is skilled and able to meet evolving needs and challenges. But the final step is in your hands. I urge AIA - and the insurance industry more generally - to invest in developing your advisors’ capabilities and upgrading their skills. As insurers, you encourage your clients to look ahead and plan well for the future. We, too, need to look to the future and continually invest in our skillsets and our talent pipelines.

Conclusion

26. I have outlined three opportunity areas – relating to (i) to well-designed and innovative products; (ii) philanthropy to build legacy and achieve impact; and (iii) people and talent development.

27. In preparing for this speech, I came across a video explaining your AIA One Billion goal. It’s an inspiring and ambitious goal to engage and influence one billion people from now until 2030 to encourage and empower them to lead healthier, longer, and better lives. Underlying this goal is recognition that insurance is ultimately about improving lives and outcomes.

28. The AIA Wealth Centre and AIA International Wealth is an opportunity to improve lives and outcomes. You do this by empowering the affluent and high net worth segment to manage their wealth responsibly and contribute to a better future for us all. Working closely with your clients across the three opportunity areas of products, philanthropy and people will take AIA one step closer to achieving your One Billion goal.

29. My congratulations once again on the launch, and as you embark on the journey ahead, I wish you every success.

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