The older they grow, the more life cover Americans get, followed by Arabs, the British, Australians and other European and Western expats. Among expat customers of Friends Provident International (FPI) — a company that provides life assurance, pensions and investment products in Asia, the Middle East and Europe — non-resident Indians or NRIs tend to be the most under-insured, an analysis of the company’s 20,000 recent consumers globally reveals.
Greater coverage
Speaking exclusively to GN Focus, Philip Cernik, Global Expatriate Proposition Manager, FPI, says, "We sell savings, investment and protection policies and nearly all of them have a protection component. Among our customer base, the older they get the more they insure themselves for. Americans, British and Australians spend a higher amount of money on protection at any given age, compared to Indians. In fact, all other nationalities tend to behave the same way, except Indians, who tend to under-insure."
Among products considered for investment, research shared exclusively with GN Focus reveals that American, Australian and Western expats seem to invest more in high-return investments such as shares, mutual funds and savings products compared to Indian expats who invest more in fixed deposits and bonds.
The latter group is driven by safety and security while Western expats are motivated by higher profits, according to the company’s quantitative research of about 300 customers undertaken in the UAE, Hong Kong and Singapore.
As the insurance sector matures in the UAE, more and more long-term products specially tailored for expats are being introduced. With complex products, increased regulations and portability being built into the products, the sector is likely to come into its own.
Speaking of the insurance habits of UAE-based expats, Mohammad Tariq, Partner, Audit, KPMG, Oman and UAE, tells GN Focus, "Expats from countries where insurance is considered a part of the cost of living will tend to insure more.
"Insurance offers savings plans. In many cases, life insurance makes up a small component. These plans encourage people to put aside a mandatory amount and when they leave the country they cash the benefits. This is in addition to primary insurance in their home country."
International approach
Expat-centric products are also gaining importance as investors become more international in nature. Taher Fakhri, Regional Compliance and Risk Officer, and NRI Spokesman, FPI, says, "Although domestic customers purchase more than expats worldwide, in the Middle East, this is reversed with NRIs representing 45 per cent of all sales on a premium income basis, Western expats representing 33 per cent and Arab expats 22 per cent, according to [financial services company] NMG’s research in 2011."
Still, insurance is not the investment vehicle of choice for most expats in the UAE. The research shows that only 21 per cent of Indians, 30 per cent of Australians and 27 per cent of expats from the UK and the US would opt for savings products from life insurance. With variation according to risk appetite, most prefer stocks, shares, mutual funds and fixed deposits.
Compared to expats from Hong Kong and Singapore, according to FPI, UAE expats are more likely to plan the purchase of property. This trend is seen across nationalities, with 80 per cent of Indians, 73 per cent of British, 50 per cent of Americans, 55 per cent of other Western expats and 95 per cent of other subcontinent expats listing it as a priority in financial planning. On the other hand, planning for retirement topped the list in Singapore and Hong Kong.
While local insurance companies have steered clear of long-term products, focusing on those requiring yearly renewal, the trend is changing.
Tariq says, "In a long-term product, until you have critical mass, you don’t make profit. You have to digest the selling cost for the first five to six years. International companies such as Zurich, Metlife and Aviva have been here for a while and sell competitive long-term products, but now there are one or two local companies that have developed their own life insurance products. I do see a trend."
Many savings products are tied to banks. The bank assurance sector is poised to see more growth as banks target high-net-worth individuals (HNWIs) to sell insurance products. "When a HNWI gets in touch with a financial institution, the bank makes sure that they sell the insurance company’s product as well. This can be personal goods or home insurance, or in case of Europe, even pet insurance," Tariq says.
