Most trust people in Asia are so entrenched in the life insurance business that we sometimes feel like we're insurance people more than trust people. Why is that?
Insurance is an important tool of wealth (and sometimes tax and estate) planning. The benefits of insurance for the client are well known. But do you know why we trust companies like them too? The liquidity from the retrocessions we get from the insurance companies and brokers makes all "wealth management" bosses very happy. The low risk and the revenue stream from life insurance products makes it a priority product for many of the trust companies. According to a confidential informant....one banking group trustee sells 10 times more insurance and/or insurance stand-by trusts than normal trusts. Strange isn't it? People are ready to pay up to and over 500bps on insurance but not remotely the same for a trust. Ever see a customer hangle over premiums? How do you think insurance groups like AIA got so "big to fail"?
Well the bubble is bursting, at least in Taiwan. http://www.iflr.com/Article/2863215/Home/Canges-to-insurance-law.html "....to deter unapproved offshore insurance policies by raising the punishment from administrative fines of between NT$900,000 ($31,200) and NT$4.5 million to imprisonment of up to 3 years or criminal fines between NT$3 million and NT$20 million, or both" Ouch!
While the offshore and onshore sales of unregulated products to onshore markets (essentially the illegal "cross-border" business) is what all parties of the game are good at, heck we've been doing for the last 40 years....the stakes are getting higher. If Taiwan actually is able to enforce a case or two then it becomes a bark with a bite and not just a bark.
So before you go back to Taipei with those no-name term sheets and generic product features and your James Bond kits think about how easy it is for your client to turn you in should he or she ever chose to. Just send them tickets and book them into your local 5-star hotel. Come on, you can afford it, remember the 3-yr trailer you get.
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