NewInsurance authority targets unrealistic sales pitches related to life policies

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The Commissioner of Insurance, John Leung at the Queensway Government Offices, Admiralty. Photo: David Wong

Published: 8:08pm, 15 May 2016Updated: 8:23pm, 15 May 2016

Paying US$500,000 for a life policy and you may get US$450 million at aged 100? One can easily find such promotional material by Hong Kong life insurance companies in social media in mainland China, which has triggered the Hong Kong government to take a number of measures to crack down on misleading projections.

Hong Kong’s Insurance Commissioner John Leung Chi-yan said his office has also started to roll out a number of new regulatory actions to prevent salesmen, who may have used the mainland social networks such as weibo and wechat, to spread unrealistic return projections.

“Such promotion is potentially illegal because Hong Kong agents are not allowed to sell products in the mainland. Those misleading promotion materials on social media must all be scrapped. When we found these materials in social media, we would ask the insurance companies to check on that and scrap these messages. So far, all the Hong Kong insurance companies have complied with our requests,” he said.

“In addition, we have a whole set of regulatory measures rolled out from April to the second half of this year to make sure insurance companies are issuing products that are fair to policyholders while their sales persons must present only realistic return projections to customers,” Leung said. “These measures not only protect the mainlanders but also all policyholders in Hong Kong.”

Mainland law prohibits Hong Kong agents selling products in the mainland but mainlanders can purchase the policies while visiting the city. Last year mainlanders spent HK$31.6 billion on such policies, accounting for 24.2 per cent of total new premiums of life policies sold in Hong Kong last year, up from just HK$2.8 billion or 5.3 per cent in 2006 when the government first released the annual figures.

The China Insurance Regulatory Commission last month issued a warning statement on its website alerting consumers to be aware of the risks of buying insurance products in Hong Kong. The statement highlighted currency risk and the different laws between Hong Kong and the mainland.