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Mainland buyers heat up HK insurance market

chinadaily.com.cn | Updated: 2016-12-23 09:34

Buyers from the Chinese mainland?are driving a big increase in?insurance policies taken out?in Hong Kong.

Chinese mainlanders spent HK$48.9 billion on insurance?policies?issued in Hong Kong in the first three quarters of this year,?accounting?for 37 percent of all premiums in that period,?according to a report by the 21st Century Business Herald.

Data released by the city's Office of the Insurance Commissioner late last month shows Hong Kong's insurance industry's gross premiums in the first three quarters of this year were HK$327.4 billion ($42.2 billion), 20 percent up from last year.

At AIA Group's office in Hong Kong on Wednesday, a woman surnamed Chen from Fuzhou, capital of Fujian province, said she bought her daughter, who's less than two years old, an insurance policy costing $30,000 every year for five years.

"Although I knew about the insurance since last year, I could only come here to buy it this year because my daughter was too young to travel at that time. However, the US dollar has gone up this year. I plan to buy my daughter a critical illness insurance policy next year," Chen said.

To serve the increasing number of customers from the Chinese mainland, AIA Group's office in Hong Kong has had to adjust its working hours.

"It is not possible to close business at 8 pm. We used to work at the office until four the next morning. I have not taken a day off this December. There are customers waiting to do certification every day," a saleswoman named Carol said.

Prudential Plc, another major player in the market, has also seen business boom, with customers swarming its office.

A company salesman said customers now have to make an appointment in advance to buy insurance.

Luo Yi, an analyst with Huatai Securities, said that while the scheduled interest rate of life insurance on the Chinese mainland is between 3.5 and 4 percent, it is between 4 and 5 percent in Hong Kong, so customers are attracted by the high investment returns.

However, concerns have been raised about mainlanders flocking to Hong Kong to buy insurance.

The China Insurance Regulatory Commission has released risk warnings several times this year, suggesting that insurance policies bought in Hong Kong are under exchange rate risk and may not be protected by law on the Chinese mainland.

Zhang Bo, an investment advisor at consultancy company Boss International, said the market is overheating, pointing out that many customers heading to Hong Kong are affected by conformity.

Zhang said buyers who know little about the insurance products they buy in Hong Kong may suffer larger economic losses if they want to cancel their insurance after realizing the benefits cannot reach their expectations.

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