Hong Kong life insurers bet on return of mainland customers to reverse a three-year slump in policy sales
- Tahoe Life expects an increase sales of insurance products to mainland clients as social stability returns to the city
- Hong Kong remains an ideal shopping place for insurance products as China faces an ageing population situation, Prudential’s Yung says
Some Hong Kong life insurance companies are placing their hopes on the return of more mainland Chinese customers to the city to help reverse a three-year slump in sales even as China and Hong Kong’s economies are slowing in tandem.
Part of their optimism is based on the sense that anti-government protests in the Asian financial hub are subsiding since the start of the new year, after a period of violent clashes towards the end of 2019.
“We are confident that there will be more mainland customers coming to Hong Kong this year to buy insurance products as the life policies here offer good investment returns and protections,” said Allan Yu Kin-nam, the newly appointed chief executive officer of Tahoe Life. “What we need to do is prepare our staff and provide them with suitable products.”
Tahoe Life plans to offer more life and medical protection products favoured by mainland tourists, he said in an interview. It will also double its sales agents to 250 and its insurance brokerage partners to 200, he added.
Sales of life policies to mainland customers more than doubled to HK$72.68 billion (US$9.4 billion) in 2016 from a year earlier, aided by an influx of Chinese tourists, according to data published by Hong Kong’s Insurance Authority. That equalled to about 40 cents for every one dollar of policy sold in the city. Sales slumped to just under HK$36 billion in the first nine months last year, according to official data.
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However, it has been downhill since that banner year, after Chinese authorities started to impose curbs by putting a US$50,000 individual cap on overseas purchases of investments, including insurance products, according to B. Wong, an agent with a top tier US life insurer.
Besides, social unrest in Hong Kong also kept many tourists away from the city and worries about the recent outbreak of Wuhan coronavirus could put a dent on cross-border travels amid heightened health checks.
Wong said mainland customers are just waiting for a more peaceful time in the city to return and buy insurance policies that not only offer good medical coverage but also offer better investment upside.
“The Hong Kong life policies can invest freely in international stock and bond markets, offering potentially higher return and diversification,” Wong said. “In the mainland, many policies need to observe a lot of restrictions. At the same time, they can only invest minimally in assets overseas.”
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At Prudential Hong Kong, chief executive Derek Yung Kai-ming also believes the sales of insurance policies to mainland visitors will rebound back this year. While China's economy may have slowed down, growth is still much higher than Europe or other western markets, which can support demand for high quality insurance products in Hong Kong.
“Hong Kong is a city which can always bounce back from crisis as history has shown, which is why I believe that mainland tourists will come back this year after the social unrest,” Yung said. “It is also due to the demand issue. China has an ageing population, many of the over 1.4 billion people need insurance for life, retirement, medical and others. Hong Kong is an ideal market to shop for these products.”
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Tahoe Life was formerly known as Dah Sing Life Assurance which was acquired by Tahoe Investment Group for HK$8.03 billion in 2017. The group was founded in 1993 by Fujian businessman Huang Qisen and has a diverse interest in real estate development, hospital and nursing home facilities and financial business.
The life insurance unit is ranked the 13th largest among 71 players in Hong Kong, based on new annual premiums in 2018 serving the city’s population of 7.5 million. Since Hong Kong stipulates that mainland Chinese tourists must buy insurance products in person, the drop in tourist arrivals have eroded sales in recent months.
CEO Yu will be watching the tourist arrivals data for indications. Some 41.38 million mainland Chinese visited Hong Kong from January to November last year. In 2018, the number rose 15 per cent to 51.04 million.
Yu said its parent company can refer clients to the Hong Kong insurance arm. Tahoe Life has rented a 12,000 sq feet floor area at Harbour City of Tsim Sha Tsui to offer VIP club services for clients from mainland China, he said.
“Local and mainland customers referred by our parent company can visit the VIP club to take a break, enjoy the sea view and have a cup of tea while we share our insurance products with them,” Yu said. “Mainland tourists might not like to come during the protests in the past six months, but they will be back when order is restored in the city. I am confident in the long term growth of the Hong Kong insurance market.”
