Chinese insurance giants likely winners under tighter regulatory environment
Credit Suisse bullish on big Chinese insurers as regulator cracks down on mainlanders buying Hong Kong insurance products
Tighter regulation of the insurance industry in mainland China and Hong Kong is expected to benefit major Chinese insurers in the long term but create uncertainties for their counterparts in the city, say analysts.
Hong Kong’s new Insurance Authority, officially established on Monday, is expected to take a more active role in overseeing an industry which has traditionally relied on self-regulation. The authority also plans to cooperate with the China Insurance Regulatory Commission (CIRC), its mainland counterpart, in cracking down on the sale of foreign insurance products on the mainland after the practice was made illegal in October last year.
In the past six months CIRC has closed 35 websites and social media accounts selling Hong Kong insurance policies to mainlanders as part of Beijing’s moves to stem the outflow of the Chinese yuan. Last year, authorities also banned mainlanders from using China UnionPay to purchase more than US$5,000 on overseas insurance products.
“Making it more difficult for mainlanders to buy insurance products in Hong Kong could hit our local business, but at the same time it is necessary to eliminate bad practices in the industry, which is a good thing,” said Roy Cheung Wai-leung, president of the Hong Kong Insurance Professionals Federation.
The latest available government statistics showed that mainland Chinese bought HK$49 billion (US$6.28 billion) worth of life insurance policies in Hong Kong during the first nine months of 2016, accounting for almost 40 per cent of all life policies sold in the city.
