White Collar

Government omits mainland data from insurance sales figures this quarter; and offers a lame excuse why

Industry sources say decision is politically driven, and it’s no secret there has been a surge in mainland business for HK insurers

PUBLISHED : Monday, 17 April, 2017, 4:24pm
UPDATED : Monday, 17 April, 2017, 10:33pm

The Hong Kong government has decided not to release the latest figures on how many mainlanders are now buying insurance-linked investment and other insurance policies, at least until the second half of this year.

And many in the market are reading that as meaning there must have been a spike in the number – just at a time when the Beijing government is attempting to curb and track avenues of mainland capital outflow.

This is a very backward step for the transparency of Hong Kong’s financial sector.

The government Office of Commissioner of Insurance (OCI) has been releasing quarterly statistics on mainlanders buying insurance policy in Hong Kong, along with other insurance statistics, as regular as clockwork since April 2005.

Its latest set, for the fourth quarter and full-year 2016, has just been released – but glaringly, the statistics on mainland buying are missing.

The OCI’s official line on the omission is that it has decided to stop releasing the number, “temporarily”, as it needs to collect “more comprehensive statistics on insurance policies issued to mainland visitors”, such as whether they are buying life policies, critical illness or annuity plans.

“The Office ... is collecting more granular statistics from the industry, including figures on medical and critical illness policies, to provide the public with more meaningful statistics to facilitate them to make more comprehensive and accurate analyses,” it rather unconvincingly told us in a statement.

“The OCI has decided to stop releasing the relevant statistics temporarily, so as to avoid the public misinterpreting the statistics. It is expected that more detailed statistics will be released in new form in the second half of 2017,” it added.

The explanation sounds ridiculous, as it should be no problem to release the accurate spending by mainlanders during the period.

It has never been the least bit difficult in the past, and the job is made ever easier these days, in a computer era when industry figures and statistics are so much more readily calculable.

Industry players say they are in no doubt, whatsoever, that the decision is politically driven.

It is no secret there has been a surge in mainland business for Hong Kong insurers. But this has clearly put the government under embarrassing pressure.

It is no secret there has been a surge in mainland business for Hong Kong insurers. But this has clearly put the government under embarrassing pressure

The omission looks little more than a feeble attempt to avoid Beijing bringing in even tougher measures to prevent yuan being earned in the mainland from being used to invest in Hong Kong-based financial products and policies.

Beijing has also clamped down on mainlanders using credit cards or other electronic payment platforms to buy policies in Hong Kong.

Mainlanders spent HK$48.9 billion (US$6.3 billion) on Hong Kong insurance policies during the first nine months of 2016, representing 37 per cent of the sector’s income.

That was double the previous year, and so we can assume this last quarter’s “temporarily” unreleased figures are again showing hefty increases.

When the government first released the statistics in 2005, mainlanders spent just HK$1.8 billion (US$230 million) on Hong Kong policies between April and December that year, representing 5 per cent of all. That growth crept up in the years since, but in the past years it has exploded, as the yuan fell against the US dollar.

Mainlanders want to park their money in US- and Hong Kong dollar-denominated products and policies issued in Hong Kong to escape the continually depreciating national currency. Their yuan lost 7 per cent in value against the US dollar last year, the largest annual fall since 1994.

Hong Kong’s insurance industry sources say the fourth quarter and the first quarter of this year has continued the rising trend in mainland business.

But the government’s decision not to give out those statistics, as normal, is weak and naive.

Transparency is a cornerstone of the Hong Kong financial services industry. This kind of action damages its image.