Hong Kong-China ‘insurance connect’ plan on hold as trade war, protests hit business environment

A proposed new “insurance connect” scheme to allow cross-border sales of insurance products between Hong Kong and mainland China is on hold because of economic uncertainties arising from the trade war and the unprecedented social unrest that has rocked Hong Kong for the last three months.

“The talks about setting up an insurance connect scheme will definitely be delayed as a result of the challenges of international business operating environment as a result of the ongoing US-China trade war. It would be hard to launch a new connect scheme under the current economic situation,” said Insurance Authority chairman Moses Cheng Mo-chi on Monday.

Cheng revealed in June last year that the authority has been in talks with its mainland counterparts to establish a special channel for the marketing, sale and processing of insurance products, using a model pioneered in the stock connect schemes that now link the stock markets of Shanghai and Shenzhen with Hong Kong. A bond connect scheme was added in 2017.

Under the proposal, which was never given a launch date, Hong Kong insurers would set up service centres in the Greater Bay Area, allowing mainland customers to settle renewal premiums and file claims for insurance products they already own. The next stage would expand the service into a full-scale insurance connect scheme to allow mainlanders to buy policies from Hong Kong companies – without having to leave the mainland – while Hongkongers could also buy products from mainland insurers.

It is a lucrative business. In the first half of this year, before the protests began, mainlanders spent HK$26.33 billion buying insurance policies in Hong Kong, up 18 per cent from a year earlier.

Cheng said while the service centres in the bay area remain on the agenda, a full-scale insurance connect would be delayed. The trade war has dragged China’s economic growth down to 6.2 per cent in the second quarter, its weakest pace in at least 27 years.

The unprecedented anti-government protests in Hong Kong, which started peacefully on June 9 in opposition to a now withdrawn extradition bill, have turned increasingly violent and led to a sharp fall in tourist numbers.