Home-grown digital insurer Bowtie receives Hong Kong’s first virtual insurance licence

Hong Kong’s insurance watchdog has issued its first virtual licence to an online-only insurer, as the government makes strides to boost the city’s internet finance services.

The recipient of the digital licence, which will allow it to sell insurance products by computer or mobile phone, is Bowtie Life Insurance, a home-grown start-up. The licence forbids Bowtie from using any agents or banks to sell insurance.

According to co-founder and co-chief executive Fred Ngan Yiu-fai, that is where virtual insurers have the edge.

“The online business model allows us to run at low cost – we only need about 50 people to develop the technology and provide customers services,” said the 35-year-old Hongkonger. “We don’t need to share any commission with agents or banks so we have a cheaper distribution channel than the traditional insurance companies.”

The Hong Kong Insurance Authority launched a fast-track approval system for insurers which operate purely online late last year, and it has attracted a number of applicants. Bowtie received its licence within about a year, faster than a traditional insurer would expect to wait.

“Virtual insurers still have to follow the same high-capital and conduct requirements as traditional insurance companies,” said Clement Cheung, chief executive of the regulator at an insurance forum last week.