Hong Kong insurance sales to be hit by UnionPay’s curbs on policy purchases
Analysts say buyers can always use other credit cards
Hong Kong’s insurance companies are poised to be suffer after credit card operator UnionPay announced it will cap overseas insurance product purchases at US$5,000 from Thursday, a move that Beijing adopted to stem capital outflows and make it tougher for mainland Chinese to buy insurance policies from local insurers.
“It’s set to hit the insurance sector in the city hard and reduce the sales because UnionPay is the major credit card used by mainlanders who are big customers for local insurers,” Louis Tse Ming-kwong, director of VA Brokerage, said.
According to government statistics, the premiums from mainlanders purchasing life insurance policies in Hong Kong hit HK$21.1 billion in the first nine months of last year, representing 21.7 per cent of new premiums from all new policy sales. That was up sharply from HK$3 billion or 6.4 per cent of all new policy sales in 2009.
The news battered insurance stocks as they slid 3.46 per cent on Wednesday in posting the biggest losses by sector in the Hong Kong market.
AIA, the largest insurer in Hong Kong, fell more than 8 per cent at one stage before trimming the loss to close 4.88 per cent weaker at HK$38.95. Prudential declined by up to 7.33 per cent before settling 4.47 per cent down at HK$143.3, Ping An lost 3.23 per cent to close at a one-year low at HK$32.95, Manulife dropped 5.07 per cent to conclude at HK$101.20 and China Life dropped 4.19 per cent to HK$17.36.
However, Credit Suisse analyst Charles Zhou said the overall impact of the Union Pay move should be manageable.
“First, the restriction only applies to the amount per transaction, not the number of transactions per day,” Zhou said in a research note on Wednesday. “Thus, the same amount can still be purchased by increasing the number of transactions. For example, a US$100,000 policy can be purchased with 20 transactions.