Beijing steps up crackdown on sales of Hong Kong insurance on mainland
The CIRC is determined to rid the industry of practices it says ‘disturb market order, mislead consumers and obstruct forex regulation’
China’s insurance regulator has closed down 35 websites and social media accounts selling Hong Kong insurance policies to mainlanders as it intensifies a crackdown on misconduct in the industry.
A growing number of mainland institutions have been breaking the law by directly selling or acting as proxy for sales of Hong Kong insurance products to mainland consumers seeking to diversify their assets in the face of a weak local currency. The yuan lost 7 per cent against the US dollar last year, its biggest drop since 1994.
Such transgressions “disturb domestic insurance market order, mislead consumers, obstruct foreign exchange regulation and help money laundering”, the China Insurance Regulatory Commission (CIRC) said on its website on Friday.
The insurance watchdog said it teamed up with police and the telecommunications authorities in a crackdown which began at the end of 2016 in 10 major provinces and municipalities including Shanghai and Guangdong.
In addition to those shut down, a further 27 websites and social media accounts on Tencent’s WeChat platform have been ordered to cease the practice. The regulator did not name the websites and accounts.
It is illegal to sign a policy issued by a Hong Kong insurer on the mainland. Some institutions also crossed the red line by illegally soliciting consumers to buy insurance products in Hong Kong, the regulator noted.
“The crackdown signals that the regulator is taking seriously its fight against those who attempt to bend the rules or bypass regulations by marketing and sales via social media on the mainland,” said Siren Xia, general manager of Shanghai Mercer Insurance Brokers. “The crackdown could help cool down the frenzy.”
The growing popularity of Hong Kong insurance with mainlanders reflects the gap between the supply and consumers’ increasingly discerning needs on the mainland, she said. Domestic insurers need to devote more effort to meet such demand.
Martin Zhang, a white collar worker in Shanghai, has paid about 20,000 yuan (US$2,936) annually for US dollar-denominated life insurance in Hong Kong since 2015 for his family. He said he planned to keep his policies in Hong Kong.
“It’s one way for me to diversify my household assets,” he said. “It doesn’t hurt to have some assets denominated in the hard currency.”
Last year, China UnionPay cardholders were banned from paying for insurance investment products through UnionPay in Hong Kong.
Mainlanders bought HK$49 billion (US$6.28 billion) worth of life insurance policies in Hong Kong in the first nine months of 2016, representing almost 40 per cent of all life policies sold in the city, according to the most recent data.