China Warns Citizens of Risks Tied to Buying Hong Kong Insuranceby
China warned residents of risks connected with buying insurance products in Hong Kong after previously tightening restrictions on such purchases as part of efforts to control capital outflows.
Products denominated in currencies such as the Hong Kong dollar and the U.S. dollar pose currency risks for buyers, the China Insurance Regulatory Commission said in a statement on its website Friday. Purchases of overseas life and investment-related insurance products are transactions under the capital account, which is not open under current rules, the regulator said.
Policyholders risk being unable to make timely premium payments if foreign-exchange payment policies change, the regulator said. In addition, the insurance policies are covered by Hong Kong’s laws, not China’s, it said.
Since February, Chinese regulators have moved to control residents’ purchases of insurance in Hong Kong, transactions which had served as a convenient way of skirting the country’s currency controls.