Following is the speech by the Secretary for Transport and Housing, Mr Frank Chan Fan, at the 5th Asia Marine Insurance Conference this morning (November 20):
Chairman Jones (Managing Director of JLJ Maritime Hong Kong and Chairman of the Asia Marine Insurance Conference, Mr Jonathan Jones), Mr Berg (President of the International Union of Marine Insurance, Mr Dieter Berg), Mr Chan (Deputy Chairman of Hong Kong Federation of Insurers, Mr Chan Pui-leung), distinguished guests, ladies and gentlemen,
Good morning. My warmest welcome to you all to this prestigious event on marine insurance. I must thank the Asia Insurance Review and the Hong Kong Federation of Insurers for choosing Hong Kong again for the fifth Asia Marine Insurance Conference.
Henry Ford, founder of the US (United States) Ford Motor Company, once said, "The best we can do is to size up the chances, calculate the risks involved, estimate our ability to deal with them, and then make our plans with confidence." Ford is right. No one can ever run a business without taking risks. Shipping is always about taking risks. The crux lies with how to minimise risks and to maximise gains. Only those who are well prepared may survive and thrive. In the maritime industry, safety always comes first, with risks vested with the party best positioned to manage.
There is no better way to describe such a deep-rooted culture than the theme of this year's Conference, "Finding Anchorage in the Perfect Storms". In this rapid-changing world filled with challenges and uncertainties, every one of us would love to enjoy prosperity, security and sustainability amidst all kinds of risks, be it natural disasters, business fluctuations, or impacts arising from unexpected geopolitical and global economic developments.
At a time, when innovation and technology have become the keys to excel in business, the maritime industry is of no exception. Fintech (financial technology), or more specifically, Insurtech (insurance technology) is redefining the insurance business model. InsurTech start-ups are developing products throughout the value chain of insurance, ranging from developing highly customised policies and adopting big data analytics in determining premiums for individual clients, to exploring the application of robo-advisory technology and artificial intelligence (AI) for online insurance services. You name it, they have it.
On marine insurance, it was announced earlier this September that the world's first blockchain platform for the marine insurance sector will be implemented from 2018 onwards. Building on global cloud technology, the blockchain platform serves to connect clients, brokers, insurers and third parties to capture data about identities, risks and exposures, as well as to integrate this valuable information into the insurance contracts. Marine insurers can use the platform to improve their capital and gain efficiencies, with increased transparency and reduced manual data entry. With the advancement of technology, administrative costs can be vastly trimmed.
This is just one example. There is huge potential in the application of InsurTech in the maritime sector, but also corresponding cyber threats to be dealt with. I trust that the upcoming panels on "Keeping Pace with Innovation & Technology" and "Managing Cyber Threats" will bring further insights and updates on the evolving trends in this aspect.
From a global perspective, immense opportunities are emerging from the Belt and Road Initiative. The Initiative aims at promoting closer economic and cultural co-operation among some 60-plus countries and economies. With increasing infrastructural projects within and between these economies, it will bring about more investment flows, closer financial integration and stronger trade volume along the land-based Silk Road Economic Belt and the ocean-going 21st Century Maritime Silk Road. More importantly, considerable business opportunities will open up for the maritime and shipping industry.
According to the consultancy study completed by the McKinsey Global Institute, by 2050 the Belt and Road Initiative is estimated to contribute up to 80 per cent of the world's GDP growth, and would enable three billion people to advance from low-income households into the middle-class. The strategic panel on "One Belt, One Road" to be held later this afternoon is most timely for us to explore the potentials and challenges, particularly for marine insurance.
More frequent trade means higher risks at stake, and this points to the heightened needs for protection along the Maritime Silk Road and vessels that navigate along these routes. In particular, some are even facing threats from war, terrorism, political unrests as well as piracy attacks.
On this, I am glad to learn about the launching of the Hong Kong China War Risk Syndicate by the Hong Kong Chinese Insurance Community. While war may sound rather unfamiliar or distant to Hong Kong, for which we are blessed, we should always get prepared for a rainy day. This new insurance initiative would help cover risks and fill the gap that typical marine insurance may exclude.
As for Hong Kong, we have a flourishing marine insurance market with a full range of insurance services on offer by global providers. Currently, we are home to 88 marine insurers underwriting hull and machinery and/or cargo risks, of which 35 are foreign insurers. To date, these businesses have collectively written more than HK$1.25 billion in net premium. The total gross premium of insurance on ships in Hong Kong surged by 10.3 per cent yearly on average in the past decade, which is higher than the annual average growth of 7.1 per cent for general insurance business. We are also a hub for protection and indemnity insurance, with 12 out of the 13 principal P&I clubs having established offices in Hong Kong, making Hong Kong the largest cluster of representatives outside London.
Given our robust foundation in international trade, our extensive pool of professionals and talents in high value-added maritime services, coupled with our superb connectivity with economies in the region, Hong Kong is well positioned and stands ready to serve the global maritime industry, particularly in the Asia-Pacific region.
Looking ahead, one of our goals is to build a vibrant, diversified and competitive pool of professionals in the maritime services sector, including marine insurance, so as to contribute to the prosperous and sustainable development of the Asia maritime industry.
In October last year, the International Union of Marine Insurance (IUMI) set up its Asian hub in Hong Kong. It is the first time in IUMI's 142-year history to establish an overseas presence outside of Europe. This gives Hong Kong a unique role in strengthening manpower training for the marine insurance sector in Asia. The Hong Kong Federation of Insurers, which provides secretariat support to the Asia hub, is working closely with various local educational institutions to provide training programmes for in-service practitioners on marine insurance. I just can't wait to hear updates and news on the collaboration from Mr Berg in a few minutes.
Finally, if I may share with you, Hong Kong Maritime Week is currently being held for the second time from November 19 to 26. Maritime Week aims at bringing together maritime and port industry leaders to share thoughts and insights, as well as to foster closer collaboration and enhance public awareness of the maritime industry. Apart from this two-day Conference, there will be some 40 other events involving more than 50 organisations from home and abroad. These include business briefings and seminars, corporate functions and visits, as well as networking activities. If you have registered for these events during the Week, I hope you will enjoy them and find them rewarding. For those who have yet to enroll, your participation will surely make the events even more colourful.
In closing, may I wish the 5th Asia Marine Insurance every success.