3 Min Read
LONDON (Reuters) - HSBC Insurance said a tenth of all people have stopped paying into pensions as a result of the global financial downturn, in a new survey published on Wednesday.
The study, polling 15,000 people in 15 countries, reveals that 18 percent of respondents have started using savings to pay off debts, whilst one in six people have reduced pension contributions.
More worryingly for global insurers, 14 percent are considering stopping their insurance products.
Clive Bannister, head of insurance, told Reuters it is investing more in recovery groups, which aim to keep people paying into pension and insurance programmes, one of the key consequences of a downturn.
The overall impact on HSBC's business is mixed. "People who can afford to protect themselves more and provision more are doing that. People who are under the gun in terms of their own debtload, they by default have to cut back," said David Neenan, head of marketing and sales at HSBC insurance. "It's the people in the middle who are procrastinating more," he added.
The profits of $2.6 billion (1.6 billion pounds) last year represented about 13 percent of group profits before goodwill charges.
In 2007, the bank said it wanted insurance to contribute 20 percent of profits, from about 10 percent at that time, but it is now aiming to get 20 percent of clients to buy insurance rather than a profit target.
"What we now say is we want one in five of the group's clients to have some form of insurance relationship," said Bannister.
The group, which has expanded aggressively in emerging markets, said on Tuesday it received regulatory approval to launch an insurance joint venture in China.
Markets such as China and India are seen as huge growth areas, with the ratio of workers to dependents in China set to decline from 8 to 1, to just 2 to 1 by 2040, said Bannister.
But premiums are likely to be impacted in India, one year after the group started its operations, where one of the largest products is assistance with burials costing a few rupees a month.
"I don't know the statistics yet in India ... but I think they will be down because of the exposure to the Indian stock market," said Bannister.
Premiums in other Asian markets are robust, he added.
The global economic has led to belts being tightened across the globe, with leisure spending and 'big ticket' items the largest casualties. 42 percent of respondents said they will be cutting back on leisure spending and 38 percent on cars and holiday.
Reporting by Lorraine Turner; Editing by Rupert Winchester