Want to sell insurance in Hong Kong? It may help to have a wealthy mum and dad
Brokers can drive up commissions by selling to relatives
While some youngsters in their 20s may struggle to make ends meet, there are also some top sales agents of a similar age that can earn million-dollar commissions by selling insurance policies to mainlanders.
Some insurers are happy to hire young mainlanders who can sell to their rich relatives, which may explain why the amount of money some Chinese spend on policies in Hong Kong has risen 10-fold in a decade.
An insurance agent of a Hong Kong firm who did not want to be named said some insurance companies liked to hire mainlanders who had just finished university.
“On the mainland, many families have had to follow the one-child policy. These youngsters can easily sell Hong Kong policies to their parents, grandparents, uncles or aunts at home,” the agent said.
“This is particularly the case when your parents are rich or if you have some wealthy uncles or aunts. Some young insurance agents – only at their 20s – have already earned commissions of more than HK$1 million a year. The key to success is simple, you just need to have a rich dad.”
Mainlanders spent HK$31.6 billion on life policies in Hong Kong last year. That represented 24.2 per cent of premiums sold in the city. They spent HK$24.4 billion in 2014, HK$14.9 billion in 2013 and HK$9.9 billion in 2012.
Ten years earlier, when the Hong Kong government first released full-year figures for mainlanders buying policies in the city, it was just HK$2.8 billion.
The strong increase, according to insurance-sector legislator Chan Kin-por, was due to the many policy alternatives and higher returns on offer.
On the mainland, the China Insurance Regulatory Commission has tight restrictions on how insurers can invest in stocks that only deliver low returns. Companies selling policies in Hong Kong could invest worldwide and their products usually offered better returns, Chan said.
Chan said the choice of currency was also a reason for mainlanders to seek insurance policies in Hong Kong because the city could offer them in Hong Kong and US dollars while mainland policies were in yuan.
“The mainlanders like to buy policies in Hong Kong because of the devaluation of the yuan last year,” Chan said. “They want to buy policies in US or Hong Kong dollars so they won’t suffer foreign-exchange losses due to the devaluation of the yuan.”
He said the trend would continue as the yuan will remain weak this year.
The yuan dropped to a two-month low last week. The currency fell 5.6 per cent against the US dollar last year.
Beijing, which is concerned about capital outflows due to the weakening yuan, from February capped mainlanders’ credit-card spending on insurance policies in Hong Kong and overseas at US$5,000.