Chinese tourists buy 16pc of life insurance sold in Hong Kong
Steady increase in spending on products prompts industry players to raise concern over risks from closing transactions during short trips
More mainland tourists are buying insurance in Hong Kong - spending HK$15 billion last year - a trend industry insiders fear could lead to complaints if sales are not handled carefully.
Mainland tourists' share of new life insurance sold in the city grew to 16 per cent last year from 13 per cent in 2012, 9 per cent in 2011 and 4 per cent in 2010.
Hong Kong insurance agents are barred from selling any products on the mainland, but mainlanders can buy policies from Hong Kong agents or banks when they visit the city.
Chan Kin-por, the legislator for the insurance industry, said mainlanders had become an important source of business for Hong Kong-based life insurance companies.
"They don't just come here for cosmetic products or jewellery but also to buy life insurance products. This is because the insurance products offered here have more features and higher returns compared with what are on offer across the border," Chan said.
Savings-type life insurance policies in Hong Kong can usually deliver 4 to 5 per cent annual returns, higher than the 1 to 2 per cent offered by mainland policies.
In addition, mainland insurers can issue only yuan-denominated policies, but Hong Kong insurers offer policies denominated in US dollars or Hong Kong dollars and yuan.
"It's good that our insurers can sell to mainlanders. However, we also need to be aware of the risks involved, as many mainlanders are buying the policies during short trips here," Chan said.
"It would be a problem if the agents or the bank staff do not get the time to fully disclose the risks or product features to them. Some mainland tourists could complain in future [if things go wrong]."
Some insurance companies have been hiring migrants from the mainland to pitch the products to visitors.
A senior executive of an insurance company who did not want to be named said his firm required agents to record the entire sales process to prevent mis-selling to mainlanders.
Mainland clients are also required to visit the company's Hong Kong offices to have pictures taken there as proof that they bought the policies in the city.
"Our company wants to ensure the clients are not misled about the risks involved. All insurance companies are taking similar measures," the executive said. "The government and the Hong Kong Federation of Insurers should take the lead to educate mainland customers on how to protect their interests while buying policies in Hong Kong. Preventing mis-selling would benefit the whole industry in the long term."