Hong Kong’s life insurance sales to mainland Chinese visitors return to pre-Covid levels as weaker yuan, rate gap drive the search for yield

Life insurance sales in Hong Kong to mainland Chinese visitors surged 59-fold in the first half, as they rushed to the city to buy policies in search of higher returns after the borders reopened, according to data from the Insurance Authority on Thursday.

Sales of policies to mainlanders hit HK$31.9 billion (US$4 billion) in the six months to June, compared with HK$540 million a year earlier, representing 31 per cent of the total in Hong Kong during the period.

Sales also exceeded the HK$26.3 billion of life and medical policies bought by mainland Chinese visitors before the Covid-19 pandemic in the first half of 2019, when they accounted for 26 per cent of the total sales.

Leading listed insurers such as AIA, Manulife and Prudential all reported strong first-half profits amid growth in sales to mainland Chinese visitors, helped by the full reopening of the border between Hong Kong and the mainland on January 8.

Overall new life insurance sales rose 26 per cent in the first half to HK$103.1 billion, from HK$81.9 billion a year earlier. This was 3 per cent higher than the 2019 first-half total of HK$99.9 billion.

Many mainland Chinese citizens turned to higher-yielding bank deposits, insurance and investment products in Hong Kong amid a weakening yuan. The Chinese currency has fallen by more than 5 per cent against the US dollar this year and by 7 per cent over the last year as a result of economic uncertainty.