‘Insurance connect’ will be next big step for Greater Bay Area, with two services centres expected to be set up by end of year
- The plan involves setting up service centres in Shenzhen and one other mainland Chinese city featuring counters for Hong Kong insurers
- Initially the Hong Kong firms will be limited to handling claims, processing payments of their mainland clients, say sources familiar with discussions
Hong Kong and mainland Chinese authorities are hammering out details for the introduction of an “insurance connect” scheme as the next major step in the financial integration of the Greater Bay Area (GBA), two separate sources told the Post.
Under the plan, there will be two service centres in mainland cities within the bay area, with Shenzhen likely to be one of those, a source said.
The Chinese government first produced a blueprint for the bay area in February last year and provided more details in May about how it would promote trade and capital flow among the 11 cities to create an economic powerhouse.
The proposed service centres will adopt a shared office model, the source said. It will allow the Hong Kong Federation of Insurers, the industry body in Hong Kong, to take the lead in renting office space in each of these two cities.
Hong Kong insurance companies will then be allowed to set up counters in the centres to serve their policyholders living in the bay area.
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The first stage of the scheme will not involve any cross-border sales of new policies, another source said. Instead, it will allow Hong Kong insurance companies to provide post-sales services such as handling claims, changing policyholders’ information and processing payment of premiums.
“We will sustain this dialogue to achieve some concrete progress within this year.”
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Mainland Chinese are big spenders in Hong Kong’s insurance sector. At the peak, they bought HK$72.68 billion (US$9.4 billion) worth of insurance policies there in 2016, more than a third of all premiums collected in the city. The sales declined in recent years after China clamped down on payments for such overseas purchases to prevent capital outflow.
The amount plunged to only HK$5.4 billion in the first quarter of this year, down 58 per cent year on year as the pandemic prevented mainland residents from coming to the city to shop for insurance products. The opening up of the bay area provides hope of a turnaround.
“The opening of the service centres in the Greater Bay Area will be a very positive move as it marks the first step of building up an ‘insurance connect’,” said Derek Yung, chief executive of Prudential Hong Kong. “If we can prove the service centres will work well, the central government will open up the GBA further for the insurance companies in Hong Kong.”
