Unrest in Hong Kong and negative perception have hit insurance sales to the mainland Chinese with market share from the offshore buyers plummeting 40 percent since 2017, reaching a four-year low.
According to data from Hong Kong's Insurance Authority, mainland Chinese buyers of insurance policies in the first quarter of 2019 totaled HK$12.8 billion ($1.6 billion), representing around 26 percent of market share for the period. This is a 40 percent drop from its 2017 peak when market share reached 43 percent in the same period.
Mere perception aside, lower demand was attributed to significantly reduced tourist traffic to Hong Kong, which posted year-on-year decreases of 26 percent and 31 percent in July and August 2019, respectively, according to government data. This plays a significant role due to regulation mandating mainland Chinese to physically meet insurance sales agents in Hong Kong to execute contracts.
UnionPay Frenzy of 2016
In 2016, the insurance industry in Hong Kong pushed premiums worth nearly $9.3 billion to the mainland Chinese amidst a frenzy fuelled by credit card UnionPay, which gave buyers a method to sidestep capital controls.
By one account according to the CEO of a local Hong Kong private bank, there was an extended period where the majority of activities were solely focused on executing premium financing and «swiping credit cards until the swiper broke».
According to data from Altruist Financial Group, a financial planning service provider in Hong Kong, insurance sales to mainland visitors dropped by between 10 percent and 20 percent in the last two months.
