Mainlanders spend HK$48b on Hong Kong insurance products policies in first three quarters, double the figure a year earlier

Insurance related product sales are expected to slow from November after new UnionPay rules take effect

PUBLISHED : Wednesday, 30 November, 2016, 7:30pm
UPDATED : Wednesday, 30 November, 2016, 10:59pm

Mainlanders spent HK$48.9 billion on Hong Kong insurance products in the first nine months this year, more than double the figure for the equivalent period last year, even as insurers expect sales will drop in the fourth quarter after Beijing blocked purchases of savings and investment linked insurance products over UnionPay cards.

Mainlanders accounted for 37 per cent of the HK$132.3 billion in new life insurance sales in the first nine months this year, according to data released by The Office of the Co

mmissioner of Insurance on Wednesday.

By comparison, outlays by mainlanders on Hong Kong insurance products last year were HK$21.1 billion in January-to-September period and HK$31.6 billion for the whole year.

Chan Kin-por, a lawmaker for the insurance sector, said the trend may turn around from November. That’s when UnionPay, China’s biggest credit card payment company, banned mainlanders from using its platform to buy investment-related insurance policies in Hong Kong. Analysts believe the ban is an effort by Beijing to help plug capital outflows.

“It has made it much more difficult for mainlanders to pay for large sum insurance policies,” Chan said.

However, he believes insurance purchases will slow, but not disappear.

“As long as the yuan continues to depreciate, mainlanders will seek out policies in Hong Kong to escape the valuation loss.... They will use other methods to get their money out of China to buy the Hong Kong insurance products,” Chan said.

Purchases of Hong Kong insurance products by mainlanders began to surge last year, with a pick up seen at the start of the year, and accelerating after the PBOC devalued the yuan by 2 per cent against the US dollar on August 11.

The yuan fell 5 per cent against the US dollar last year and has slumped another 7 per cent this year.

Life insurance policies sold in the city are issued in US dollars or Hong Kong dollars, making them attractive to buyers looking to hedge against yuan devaluation.

The interest from mainlanders helped lift total new life policies sold in Hong Kong to HK$132.6 billion in the first nine months this year, up 35.8 per cent on year.

Non-investment linked products increased by 45.6 per cent to HK$128.6 billion.

Investment linked policies, which allow investors to choose how to invest among different funds and bear any profit or losses, were less attractive amid the volatile market this year. A total of HK$3.5 billion in investment linked policies were sold in the first nine months of the year, a drop of

60 per cent year on year.

Total sales of general insurance policies increased by 0.8 per cent to HK$35.7 billion.