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Purchased insurance premiums for mainland visitors in Hong Kong soar in 2016

By Yuan Can (People's Daily Online)    18:13, September 02, 2016

The number of Chinese mainlanders buying insurance in Hong Kong doubled in the first half of 2016, according to statistics released on Aug. 31 by the Office of the Commissioner of Insurance of Hong Kong SAR. The statistics shows that new premiums for mainland visitors amounted to HK$30.1 billion, or nearly double that of the same period in 2015.

Expectations of the depreciation of China's yuan, diversified insurance products and the high credibility of Hong Kong’s insurance industry all contributed to this increase, said Chan Kin-por, a member of the Legislative Council of Hong Kong on insurance.

In the short term, China's yuan is going to stay relatively weak, according to Wang Ju, senior foreign currency strategist at HSBC in Hong Kong. HSBC maintains a forecast for the yuan at 6.9 against the USD by the end of this year. The depreciation of China's yuan in the next two years will range from 3 to 5 percent, said Wang.

A Hong Kong insurance agent told Caixin that clients from the Chinese mainland favor critical illness insurance and savings insurance, especially life-long insurance, which factors in potential future inflation. The same report cited a mainland employee in the Hong Kong insurance industry, who explained that some people buy insurance in Hong Kong in order to transfer their capital, while others buy it for the future education and well-being of their kids.

A professor at a university in Beijing, whose daughter is two months old, said he choose critical illness insurance for those under 18 because he thought there was possibility of China's yuan depreciating in the future, and he wanted to ensure that the settlement of all claims would be guaranteed.

China is facing more pressure on capital outflow in 2016. According to a previous report, UnionPay International put a limit on purchases of insurance products in Hong Kong using credit and debit cards issued by Chinese mainland banks beginning Feb .4, 2016.

Each purchase of premiums made in Hong Kong using UnionPay cards is capped at $5,000, but no daily limit is set for the number of total transactions, according to a report by Bloomberg. Another report said that, starting March 12, the People’s Bank of China prohibited the use of electronic payment services by mainland individuals for any products related to life insurance or investment.

Despite these restrictions, Chan predicted that the phenomenon of mainland visitors flocking to Hong Kong for insurance isn’t going away any time soon.

"It won’t be surprising if premiums from mainland visitors account for more than half of the total premiums in Hong Kong in the next three to five years, as the population of Hong Kong is only 7 million," Chan said. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor: Yuan Can,Bianji)

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