Quick Take: Mainlanders Buying Less Insurance in Hong Kong
Chinese mainland visitors bought much less insurance in Hong Kong during the first three quarters of 2017, as concerns over yuan devaluation lessen while tighter capital controls create barriers for funds flowing from the mainland to Hong Kong.
New sales of policies to mainland visitors declined, according to a statement made by Hong Kong’s Insurance Authority on Wednesday, falling from $23.7 billion in the fourth quarter of 2016 to $10.1 billion in the third quarter of 2017.
In the third quarter, new premiums plunged by 47% from a year earlier, largely due to fewer purchases by mainland visitors, said Carol Hui, the insurance regulator’s executive director.
“Tighter measures governing mainland capital inflows and outflows have also led some insurers to adjust their sales strategies, causing a decline in premiums,” Hui said.
China tightened controls on personal foreign exchange purchases in late 2016. At the same time, it imposed restrictions on outbound corporate purchases of insurance in order to stem capital flight.
In October 2016, China’s biggest bank card provider UnionPay said it would not allow mainland cardholders to buy “any insurance product, including those serving as investments, in Hong Kong.” At the beginning of 2017, the State Administration of Foreign Exchange tightened the checks and reporting on large foreign currency transactions by individuals.
Mainland visitors bought some HK$3.5 billion ($448.3 million) in investment-related insurance in the third quarter of 2017, according to data from the insurance regulator, of which HK$9 billion was universal life insurance policies. Sales of this type of short-term, high-yield product plummeted by 78% in the third quarter from the end of 2016, according to Hui.
Sales of medical or protective types of policies to mainland visitors will remain steady, while sales of investment-related insurance are expected to decline further in the near future, Hui added.
Contact reporter Leng Cheng (firstname.lastname@example.org)
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