Mainlanders snap up Hong Kong insurance products in first quarter, amid fears of trade war, forex losses
- Mainlanders bought HK$12.77 billion (US$1.63 billion) of life and medical insurance products in Hong Kong in the first quarter – a rise of 8 per cent from 2018
- New rail and bridge infrastructure credited in part with boom in sales to mainlanders
Mainlanders spent HK$12.77 billion (US$1.63 billion) on life and medical insurance products in Hong Kong during the first quarter, reflecting a rise of 8 per cent from a year earlier, according to data released by the Insurance Authority on Friday.
“The trade war between the US and China has led to a volatile stock and currency market in mainland China since mid last year,” said Jasper Lo, chief of investment strategies at Eddid Securities and Futures.
“This has led more mainlanders to come to Hong Kong to buy insurance products to provide protection for their families and to achieve a more stable investment return.”
Regulations prohibit Hong Kong insurance salesmen from marketing policies on the mainland, but the policies can be bought by mainland residents while visiting Hong Kong.
New infrastructure projects, including the high-speed rail service linking Hong Kong and mainland cities since September, as well as the Hong Kong-Zhuhai-Macau Bridge, which opened in October,
has made it easier for travellers to visit the city, said Derek Yung, chief executive of Hong Kong at Prudential.
The insurance products bought by mainlanders represents 26.4 per cent of the total new life insurance sales of HK$48.4 billion during the first quarter, the Insurance Authority data showed.
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Of the insurance products sold to mainlanders, 74 per cent are medical or whole life policies, while 26 per cent are saving plans or investment-linked policies.
“Mainlanders like to buy insurance products in Hong Kong as they want to find better protection for their families. They are mainly buying medical and critical illness products,” Yung said.
“Mainlanders also like to buy insurance products in Hong Kong as the policies here have more investment options. These products can help to diversify their investment portfolio and provide a good investment return to help accumulate assets for their families.”
“We are offering health insurance products with a level of sophistication and reliability that cannot be easily matched by products sold in China,” said Alex Chiu, medical director of AXA Hong Kong and Macau.
The Insurance Authority is lobbying to gain approval for Hong Kong insurance companies to set up services centres in mainland cities in the Greater Bay Area in an effort to provide better after sales services for mainland customers.
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Hong Kong insurance policies can be used to hedge against declines in the value of the yuan against the US dollar. Most Hong Kong policies are issued in US dollars, or effectively pegged to the US dollar under the city’s Linked Exchange Rate system.
The yuan was changing hands at 6.9025 yuan per dollar on Friday, representing a loss of about 0.4 per cent this year.
In 2016 mainlanders spent a record HK$72.68 billion (US$9.28 billion) buying Hong Kong-issued life policies. The 12-month period coincided with a 7 per cent drop in the value of the yuan against the US dollar, or nearly double its rate of depreciation in 2015.
Investments by mainlanders in Hong Kong insurance products had dropped over the past two years, after China imposed restrictions on insurance payments and as the yuan gained 6.3 per cent against the US dollar.
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In 2018, mainlanders spent HK$47.58 billion to buy life insurance products in Hong Kong, down 6.4 per cent from HK$50.84 billion in 2017, which was down 30 per cent from the prior year.
Glenn Turner, chief operations officer of Altruist Financial Group, said the increase of mainlanders buying Hong Kong policies in the first quarter reflects the overall sales growth of insurance, adding that Hongkongers had also increased their purchases of insurance products.
