Proposed regulator needs to consider interests of mainlanders who buy insurance policies in HK
Mainlanders used to visit Hong Kong to shop for luxury handbags, jewellery and infant formula. They’ve now added insurance to their shopping list.
That’s sparked new regulatory concerns and is something lawmakers need to pay attention to as they discuss legislation that will establish an insurance authority.
The good news is that mainlanders spent HK$16.9 billion buying life insurance policies in Hong Kong in the first nine months of this year, according to government statistics released on Friday.
That surpassed the HK$15 billion they spent on buying such policies here in the whole of last year.
Mainlanders accounted for 20.3 per cent of new life insurance sales in Hong Kong in the first three quarters of this year. That compares with 16 per cent last year, 13 per cent in 2012, 9 per cent in 2011 and 4 per cent in 2010.
The bad news is an increase in regulatory concerns. Why are so many mainlanders buying insurance policies here and why has the growth rate been so strong?
Current rules ban Hong Kong agents from selling policies on the mainland, but mainlanders can buy policies when they travel here.
The grey area revolves around the fact that industry players say many insurers now prefer to recruit new migrants from the mainland as agents so that they can invite their friends and relatives on the mainland to buy policies.
The 80,000 insurance agents and bank sales people who sell insurance in Hong Kong are currently self-regulated and do not need any licences, but that will change if the proposed insurance authority is set up in the next couple of years.
If mainlanders buying Hong Kong products becomes a permanent feature of the local market, which looks likely, lawmakers need to respond to that trend. They should review whether the proposed legislation has sufficient provisions to address cross-border sales of insurance policies and related matters and whether the insurance authority will have sufficient power or guidelines to ensure sales agents do not mis-sell to clients.
At present, there are not many complaints from mainlanders. But we should never take action only when problems appear. Mainland customers are now big buyers in the market and our regulator needs to protect their interests too.