Building a unified Hong Kong – China insurance market

After the “Stock Connect” is implemented to allow investors from Hong Kong and China to trade on stock markets of both places, the city’s insurance sector draws inspiration from the idea to propose “Insurance Connect”.


The “Insurance Connect” proposal suggests that mainland policyholders can renew policies and file claims through service centres set up by Hong Kong insurers in the Greater Bay Area (GBA).

Hong Kong Insurance Authority chairman Mr Moses Cheng says the scheme, when implemented full-scale, would allow Hong Kongers to buy products from mainland insurers, and mainlanders to buy policies from Hong Kong insurers in China.

He adds that the authority’s mainland counterpart China Banking Insurance Regulatory Commission (CBIRC) gave “positive feedback” on this idea back in May.

The local insurance companies came up with this idea in hopes of retaining mainland customers, as sales to them plummeted amid tighter restrictions on capital outflows in China.

Insurance Authority’s data shows that mainland customers spent HK$40.4 billion on Hong Kong life insurance policies during the first three quarters of 2017, down 17 percent from the HK$ 49 billion spent for the same period last year.

While the Insurance Connect scheme could help boost sales to mainlanders, China’s capital-control measures could pose as a challenge since Hong Kong policies could be a tool to funnel cash out of China.

“The major concern of the CBIRC is how to control capital outflows – any premium payments and compensation involve cross border fund flows. We need to figure out how to make sure the fund flows do not breach China’s capital controls,” says Mr Cheng.

“Since the payment streams for life insurance may last for 10 or 20 years, while the compensation may be made many years later, the fund flow controls would be more complicated than the Stock Connect,” he adds. “We would need to study many details.”

Mr Chan Kin-por, lawmaker for the insurance sector, says the “Insurance Connect” proposal could boost the insurance industry.

He adds that simple life policies and medical products can be sold via the connect scheme.

“If we can have a connect scheme which ensures that insurance payouts are returned to the mainland, the central government would feel comfortable,” he says.

His concern is addressed at a summit held on September 27, where insurance experts discussed how to make “Insurance Connect” work in the GBA.

“We can use the USD-denominated assets that we get from the mainland to invest in infrastructure projects in the Greater Bay Area,” says Mr Fang Lin, Chairman of insurer FTLife. “It would be a win-win for both Hong Kong and China.”

Mr Witman Hung, the Principal Liaison Officer for Hong Kong, Shenzhen Qianhai Authority, speaks from his own experience and calls for a “GBA insurer”.

“I have to buy insurance for my car in both Hong Kong and mainland, as I commute between the two places very often,” he says. “Why can’t we have an insurer in the GBA that sells insurance products that can be accepted in both places?”

Although the GBA market represents a great business opportunity for Hong Kong insurers, Mr Hung warns them of the challenges ahead.

“Even if they set up offices in China, it doesn’t mean they can sell Hong Kong insurance products. They still need to sell products regulated by the CBIRC. Also, this is a new market for them where they need to fight for new clients,” he says.

Besides the “Insurance Connect” scheme, the Insurance Authority is also setting up a Belt and Road Insurance Facilitation Platform to help spread insurance information for infrastructure projects related to the Belt and Road initiative.

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