Huge response to Insurance Authority’s online-only fast track licensing proposal
But Hong Kong’s insurance regulator is yet to give licences to any of the 40 plus companies that have made enquiries so far
More than 40 international and Chinese tech companies and start-ups have approached the Insurance Authority seeking information on digital insurance licences via the newly launched fast track scheme, according to an official.
“This shows Hong Kong can attract a wide range of companies to come here to set up insurance businesses,” said Carol Hui Mei-ying, executive director of long-term business at the Insurance Authority, on Wednesday, adding that the fast track will help the development of insurtech and attract tech firms to set up digital insurance operations.
The authority in October introduced the fast track programme to allow tech firms to operate online-only insurance businesses to offer direct sales of basic life insurance, travel or personal accident coverage.
Traditional insurance companies, which sell via agents and brokers, still require longer approval times of more than a year.
Hui said the companies that have made enquiries come from a variety of backgrounds and from several different countries.
“One condition for applicants of the fast track licence is that they have to partner with a traditional insurance company. This is because many tech firms or start-ups do not have experience in running an insurance business and also requires long term commitment,” she said.
Although no formal applications have been received so far, Hui said potential candidates have been actively working on their partnerships so that they can apply.
With regards to traditional insurance companies, Hui said the authority was encouraging them to use the so-called sandbox scheme launched last September to conduct pilot projects using new technology before getting regulatory approval.
On the performance of the insurance sector, she said the percentage of mainlanders buying new insurance saw a double-digit decline in 2017 from the previous year, leading to similar drop in premiums.
Mainlanders rushed to Hong Kong to buy insurance policies in 2016 because of the devaluation of the yuan, which fell 7 per cent against the US dollar, according to insurance executives. Since the policies in Hong Kong are denominated in Hong Kong dollars or US dollars it attracted mainlanders to buy to hedge against the falling yuan.
However, as the yuan strengthened in 2017 it cut the need for such hedging. Besides, Beijing also tightened credit card payments for insurance policies bought in Hong Kong, which led to the decline.
However, Hui said total life insurance policies in force still showed double digit growth in 2017 and the falling trend of mainlanders buying policies stabilised in the fourth quarter.
“Ninety-five per cent of mainlanders buy protective policies in Hong Kong such as life, pension or medical with an eye on the future, and are not buying short-term speculative products,” she said.
Financial Secretary Paul Chan Mo-po in his budget last week said the government would give tax exemption for contributions made to certain annuity pension products.
Moses Cheng Mo-chi, chairman of the Insurance Authority, said it is working on guidelines for the annuity products that will get tax exemption. He said a working group has been set up with industry professionals and hoped that the guidelines would be released in the second half of this year.
“Basically we will only allow long-term annuity products to qualify for the tax exemption,” Cheng said.