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 to mainland Chinese visitors hit HK$31.9 billion (US$4 billion) in the six months to June versus HK$540 million a year earlier
- Overall new life insurance sales in Hong Kong rose 26 per cent year on year in the first half to HK$103.1 billion, higher than the HK$99.9 billion in the same period of 2019
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.
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Mainland Chinese visitors, the biggest spenders on Hong Kong insurance policies before the pandemic brought cross-border travel to a standstill for the past three years, started to return to the city to buy products in last year’s fourth quarter.
“We have seen a very strong domestic performance, as well as a strong rebound in business from mainland Chinese visitors during the first half of the year,” said Patrick Graham, CEO of Manulife Hong Kong and Macau.
Manulife’s sales in the second quarter doubled to HK$2.1 billion and surpassed the pre-pandemic record set in 2019, according to Graham.
“We are cautiously optimistic about our sustained growth momentum in the second half of the year,” he said, noting strong demand for health and retirement products from mainland visitors continuing.
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Visitors from across the border spent only HK$2.1 billion, or 1.5 per cent of the total, on life and medical insurance policies in Hong Kong in 2022, the data showed. Though this eclipsed the amount in 2021, it was far short of the HK$43.4 billion in 2019, the last year before the pandemic.
The reopening of the border also drove sales of travel insurance, with premiums rising 13 per cent to HK$10.4 billion in the first half, the Insurance Authority data showed.
In the first half, 13 million travellers visited the city, including more than 10 million from mainland China, according to figures from the Hong Kong Tourism Board. This was significantly higher than the whole of last year when only 604,564 people visited the city.
“With more international arrivals coming to Hong Kong over the third quarter, we see continued growth in demand for our wealth and health solutions,” said Edward Moncreiffe, CEO for Hong Kong and Macau at HSBC Life. The insurer sold HK$8 billion worth of new policies to overseas visitors, 70 per cent of them to travellers from mainland China.
“We remain positive that this strong momentum will prevail for the rest of the year.”
