Policies linked to investments not faring well in HK

Hong Kong insurers have sold fewer yuan-denominated insurance policies and investment-linked products this year as a result of poor market sentiment, according to the Hong Kong Federation of Insurers (HKFI).

Total sales of investment-linked policies dropped 29.5 per cent in the first quarter to HK$3.96 billion. In comparison, non-investment-linked products increased 34.1 per cent in the first quarter year on year, to HK$15.06 billion.

This meant 78 per cent of life insurance policies sold in the first quarter were non-investment-linked, for which policyholders receive a low guaranteed return.

The investment-linked products allow policyholders to invest in different funds, and shoulder any gain or loss. Sales of such policies soared to HK$60.04 billion when the Hang Seng Index rose to a record high in October 2007 - three times those of traditional insurance policies, which totalled HK$20.31 billion.

Sales fell in 2009 during the financial crisis to HK$15.06 billion, about half those of traditional policies. Investment-linked policies have stayed less popular since then.

HKFI chairwoman Agnes Choi said poor sentiment amid the euro-zone crisis had made investors less willing to take on risk. 'This is not just about insurance. Other investment products are also finding it hard.'