- Insurance commissioner in talks with industry participants
- Purchases by mainland Chinese rose 30 percent last year
Chinese insurance purchases in Hong Kong are under further scrutiny, with the city’s regulator saying it’s in talks with industry participants on new rules to protect the surging numbers of buyers from the mainland.
“It is necessary to enhance protection of the mainland buyers,” who may not understand the potential risks before signing contracts, the Office of the Commissioner of Insurance said in an e-mailed statement late Monday. Chinese purchasers of Hong Kong policies will be required to sign an acknowledgment that they understand the key elements of the policy they are buying, the regulator said, adding that it expects to implement the new rules in the second half of the year.
Surging demand for insurance in Hong Kong has been boosted by mainland Chinese seeking to move money abroad amid a weakening economy and expectations of further declines in the yuan. Multiple credit-card swiping to buy insurance products, which isn’t illegal in Hong Kong, has provided Chinese individuals a way to avoid limits on capital outflows set by regulators.
Purchases of insurance and related investment policies by mainland Chinese visitors to Hong Kong rose 30 percent last year to HK$31.6 billion ($4.1 billion), according to the city’s insurance regulator.
The Hong Kong regulator said it’s working closely with its counterpart on the mainland, and will step up its inspections of insurance companies’ compliance with anti-money laundering regulations, according to the statement.
Last year, Hong Kong’s former Insurance Commissioner Annie Choi warned of growing money-laundering risks in the city’s insurance industry, in particular in cases where the value of policies is inflated after purchase.
The latest move by the Hong Kong regulator follows reports of a parallel crackdown by the China Insurance Regulatory Commission on sales of overseas insurance policies. The CIRC informed its branches on May 13 to investigate illegal sales of overseas insurance policies in China, Caixin reported Monday. Overseas firms aren’t allowed to promote foreign insurance products on the mainland through such means as organizing investment seminars, Caixin said, citing a person close to regulators.
Separately, the Chinese regulator warned last month against risks connected with purchases of insurance products in Hong Kong by mainland Chinese. Products denominated in currencies such as the Hong Kong and U.S. dollars pose currency risks for mainland buyers, according to a statement from the insurance regulator. Policyholders risk being unable to make timely premium payments if foreign-exchange policies were to change, the CIRC said.
Since February, Chinese regulators have moved to restrict residents’ purchases of insurance in Hong Kong, by limiting the amounts that can be transferred to buy certain policies using credit cards or online transactions.