UK insurer Prudential to focus on Hongkongers as mainland China customer numbers in city decline
Company looking at potential market for health insurance for city’s millennials, after government plan to encourage more private health care
British insurer Prudential said it aimed to prioritise Hong Kong’s local market, placing emphasis on health and protection products after a drop in sales of insurance policies last year to mainland Chinese visiting the city.
Its sales in Hong Kong to mainland customers were down around 20 per cent last year, in line with its peers, after peaking in 2016, although the company has retained a 27 per cent share of the market for sales to mainland Chinese in Hong Kong over the last four to five years.
“What we are seeing is now is the market stabilising. It is kind of finding its proper base,” said Nic Nicandrou, chief executive of Prudential Corp Asia in Hong Kong.
Mainland Chinese have been big buyers of insurance products in Hong Kong because of the wider coverage and better private health care services, as well as to diversify into US-dollar denominated policies. But Beijing has cracked down on the practice since the middle of last year on concerns that it was aiding capital flight.
There are around 4 million mainland Chinese visitors to the city a month, with a small proportion of them seeing it as a natural place for financial and wealth planning, Nicandrou said.
In 2016, Prudential exited the distribution of its products through brokerages in response to intensifying restrictions in mainland China. Instead it started to rely on proprietary channels such as agencies and banks to gain better control of its operations, while ensuring no rules or laws were broken.
Nicandrou said that mainland China customers buying in Hong Kong remained an important contributor for the company, but it did not rely on just them.
In Hong Kong, Prudential may aim for the new voluntary health insurance market announced by the government, which is designed primarily to encourage the city’s 2.3 million millennials to buy private hospital treatment by providing them with tax incentives.
“We look after the very high end in Hong Kong predominantly and it is an opportunity to come in now at entry level to do some business there,” Nicandrou said.
Prudential’s profit from new business in Asia rose 12 per cent in 2017 from the year before, with that from new business in Hong Kong rising 16 per cent.
The gains reflected a greater focus on health and protection products, even though the average ticket size of such policies was much smaller, he said.
Last week, Prudential said it planned to spin off its UK and European business from its international operations, a move aimed at better focusing on faster growing markets such as Asia and the US.