HSBC Commercial BankingHong Kong Small Business Insurance Survey November 2007

Albert ChanSenior Executive Commercial Banking The Hongkong and Shanghai Banking Corporation Limited

©The Hongkong and Shanghai Banking Corporation Limited

The HSBC Commercial Banking Small Business Insurance Survey in Hong Kong• Survey of small businesses on the type of insurance they have, their

attitudes towards insurance and the extent of their contingency planning

• 500 SMEs surveyed by telephone in the third quarter of 2007, including HSBC customers and non-customers

• SME defined as a private company with staff of 50 or less for non-manufacturing, and 100 or less for manufacturing

• We believe there is huge potential for the business insurance market to grow in Hong Kong

©The Hongkong and Shanghai Banking Corporation Limited

Business disruption

1 in 3 SMEs say they have experienced a significant disruption to their business.

Note: Multiple responses allowed. Graph base=160

39%

33%

29%28%

21%20%

6%

0

5

10

15

20

25

30

35

40

45%

Physical damage to property

or stock

Accident/Injury Fraud ordishonesty

of employee

Theft Legal liability tothird parties

Loss of keypersonnel due to

injury, illness or death

Other

©The Hongkong and Shanghai Banking Corporation Limited

Insurance coverage

More than half of SMEs (54 per cent) do not have insurance coverage beyond the minimum legal requirements for employee compensation, motor insurance and Mandatory Provident Fund. The majority said it’s not important.

Note: Multiple responses allowed. Graph base=237

64%

20%

15% 13%

7%

2%

10

20

30

40

50

60

70%

It’s notimportant

It’s tooexpensive

Legally requiredinsurance is

sufficient/It’s notnecessary

I don’t knowwhat’s available

It’s toocomplicated

Others0

©The Hongkong and Shanghai Banking Corporation Limited

Insurance claims

3 in 10 SMEs have filed an insurance claim for their business.

Note: Multiple responses allowed. Graph base=149

44%

34%

19%

10%8%

6%4%

1%5

10

15

20

25

30

35

40

45

50%

Accident/Injuryto workers

Physical damageto property or

stock due to fire,water damage

or robbery

Loss of keypersonnel due to

injury, illnessor death

Theft Productsspoiled

Legal liability tothird parties

Fraud ordishonesty of an

employee

Other0

©The Hongkong and Shanghai Banking Corporation Limited

Types of insurance coverage

Insurance for accidents or injuries to workers and physical damage to property or stock are the most popular. But third-party liability coverage is also important.

Note: Multiple responses allowed. Graph base=231

53% 52%

29%

19%

15%

8%

4% 3%

10

20

30

40

50

60%

Accident/Injuryto workers

Physical damageto property or

stock due to fire,water damage

or robbery

Loss of keypersonnel due to

injury, illnessor death

Legal liability tothird parties

Theft Products spoiled Businesstrip/travel

Fraud ordishonesty ofan employee

0

©The Hongkong and Shanghai Banking Corporation Limited

Insurance benefits for staff

Less than half of SMEs (48 per cent) offer insurance benefits to employees, but 62 per cent of those say benefits help to attract and retain staff.

Note: Multiple responses allowed. Graph base=500

43%

13%11%

52%

10

20

30

40

50

60%

Medicalinsurance

Lifeinsurance

Other personalinsurance

None ofthe above

0

©The Hongkong and Shanghai Banking Corporation Limited

Contingency planning

Nearly half of SMEs think Hong Kong could be hit by a pandemic in the next 10 years, but only eight per cent have a contingency plan for their business – and less than half of those plans include insurance.

Note: Graph base=499

50%

37%

47%

21%

5

10

15

20

25

30

35

40

45

8%

Yes, and havecontingency plan

Yes, but nocontingency plan

No, I don’tthink so

Don’t know/Hard to say

03%

Agnes ChoiGeneral Manager and Head of Corporate Insurance HSBC Insurance (Asia-Pacific) Holdings Limited

©The Hongkong and Shanghai Banking Corporation Limited

FlexiCommercial Insurance

• Innovative

• Flexible

• Simple

• Instant cover upon purchase

• Enhanced coverage

©The Hongkong and Shanghai Banking Corporation Limited

Features

• Innovative and flexible:– Combination of life and non-life products– 190 possible combinations covering 3 insurance categories

– physical assets, public liability and employee benefits

– 3 levels of coverage– Diamond, Gold, Silver

– Protecting SME business under 8 insurance lines– Property All Risks, Business Interruption, Money, Fidelity Guarantee, Public Liability, Group

Medical, Group Life and Group Personal Accident

– All of the choices are included in one single policy– Saves small businesses time and administration costs

©The Hongkong and Shanghai Banking Corporation Limited

Example 1

Operations-oriented industries (eg retailers) are often exposed to risk of theft or damage to goods, business interruption and employee fidelity.

No Cover

Diamond

Gold

Silver

PhysicalAssets

PublicLiability

EmployeeBenefits

©The Hongkong and Shanghai Banking Corporation Limited

Example 2

People-oriented businesses (eg accounting firms) cannot afford to overlook employee benefits, public liability and other human resources needs.

No Cover

Diamond

Gold

Silver

PhysicalAssets

PublicLiability

EmployeeBenefits

©The Hongkong and Shanghai Banking Corporation Limited

Other features

• Simplicity– Easy to understand– Easy to choose

• Instant cover upon purchase– Simplified underwriting procedures

• Enhanced coverage– Operating on first loss basis– Claims amount can be reimbursed up to 100% of insured amount

Q&A