Do AXA Life Customers Need To Be Worried?

In recent news, HSBC will be acquiring AXA Singapore for US$575 million.
 
The first thing to note is that major insurers have two distinct “arms”.
 
The first is the “Life” arm, which deals with coverage for people. Such policies include Term, Wholelife, Health, Personal Accident, Shield plans, and is meant to protect an individual if accidents, illness or health issues happen to them.
 
The second is the “General Insurance” (“GI” for short) arm. These policies deal with “non-human” coverage, such as Motor, Commercial, Employers Liability & Work Injury Compensation (WICA), etc. It is common for companies or individuals to change insurers for such policies as they often do not involve health underwriting (because they are not dealing with “humans”).
 
HSBC has expressed that they will cease renewal of some of their General Insurance lines, and respective policyholders will be affected and need to find alternatives. However, the Life arm of AXA is intended to remain status quo.
 
For purposes of this article, the below pointers will be about the Life arm, which is what majority of our clients are on.
  • Should existing AXA Life customers be concerned?
  • What will happen to their existing policies?
  • The MOST important thing you need to worry about…

Should existing AXA Life customers be concerned?

While the news has been announced, it is still subject to regulatory approval that would probably close only in the fourth quarter of 2021. Even if the deal goes through, do we as consumers need to be worried about our policies being cancelled?
 
What if we have existing insurances with AXA, but have become uninsurable since? What about any wealth accumulation policies we also have with them?
 
Firstly, the Policy Owners’ Protection (PPF) Scheme which is supervised by the Monetary Authority of Singapore aims to ensure the stability of the financial system in Singapore and to require financial institutions to have sound risk management systems and adequate internal controls.
 
All insurance companies would also fall under the scheme and the following is stated:

If the business is sold to another insurer, the PPF Fund can be used to fund the transfer. The insurer taking over must provide coverage to policy owners up to an amount no less than what they are covered under the PPF Scheme.

This was exactly what happened when Singapore Life (Singlife) did when Zurich Life Singapore had ceased operations here in 2018. It is clearly stated on the news that

Under the agreement, Singapore Life will become responsible for all Zurich Life Singapore’s customers’ policies, totalling approximately S$6 billion of coverage for life, critical illness and disability benefits.

In fact, in recent news (Sep 2020), Aviva sold a majority of their shareholdings to Singapore Life. It would also seem that the partnership would have created a better customer experience in future.

Customers and partners of Aviva Singapore will continue to deal with Aviva as usual and there is no impact to customer policies as a result of this announcement. Aviva Investors’ operations and clients in Asia will not be impacted by this transaction.

The proceeds will be used to further strengthen Aviva’s central liquidity and will be considered as part of Aviva’s broader capital management and debt reduction objectives.

Secondly, mergers & acquisitions happen every day in the business world, although one cannot help but worry “what if”, especially with so much noise from the ground.
There are several other examples that can be found:
  • In 2004, Manulife Financial Corporation and John Hancock Financial Services Inc had a merger.
  • The Asia Life Assurance Society Limited became TM Asia Life Singapore Ltd in 2007, which was later renamed to what we now know as Tokio Marine Life Insurance Singapore Ltd.
Instead, the company would likely have stronger financials as a bank, HSBC, would be taking over the policies and AXA may stand to benefit from this in the longer term.
 

What Will Happen To Their Existing Policies?

 
Jean Drouffe, CEO of AXA Insurance Pte Ltd (Singapore) was quick to send out a note to all existing stakeholders that HSBC will have to honour all their obligations, as per AXA previously and no action is required on their end.
 

The MOST Important Thing You Need To Worry About…

 
As consumers, the biggest (and probably the ONLY) worry we should have is whether the agents that we previously got the policies from, are still able to service us when it comes to claims, other servicing matters such as address and contact detail changes, or helping to manage our investments for us.
 
Ironically, in 2013, HSBC Insurance Singapore ceased having tied agents as part of their distribution strategy. AIA then offered terms to recruit these agents into their company, which made up about 400 of them.
 
It is most likely that they would have limited capacities in servicing their existing clients, unless they also became AIA clients. So what will happen to the agents that solely distribute AXA? Where will they go next?
 
Thankfully in the current situation, we have both HSBC and AXA as partners, being an independently owned Financial Advisory firm and this means that whatever happens, we would have our clients’ best interests at heart and continuing servicing them regardless.
 
If you are still concerned and need more clarification, you may reach out to AXA’s Customer Care team at +65 1800 880 4888, or reach out to us.