More mainlanders buy insurance policies in Hong Kong

They spent US$4.1b on insurance policies in 2015.

Hong Kong plays host to over 40 million mainland Chinese visitors each year, many of whom come to visit Disneyland, sightsee, and shop for products like baby powder that are hard to get in the mainland.

One other thing they have had on their shopping list is insurance policies issued in Hong Kong but which cover them on the mainland. Adding on a trip to an insurance centre has become so much a part of trips to Hong Kong that insurance offices are the fastest growing sector in taking up office space in the territory.

Surging demand
In 2015, mainland Chinese visitors spent US$4.1b on insurance policies, 30% higher than the previous year and almost 400% more than 2011 levels. To meet the surge in demand, insurers have added an extra 20,600 people to their headcounts over the past five years (2011-2015), with 12,500 people being added in the last two years alone, according to Denis Ma, head of research at property firm JLL.

“Although the mainland government has tightened restrictions on the use of third-party payment providers to buy insurance products in the city, including the restriction on mainlanders using their China Union Pay debit cards to buy policies, the underlying factors driving growth in this industry remain unchanged.”

Regulation
Bloomberg noted that in one tightening move in February, mainland regulators limited the amount of money that residents could transfer to buy certain policies using China UnionPay Co. credit or debit cards. The response: some buyers swiped cards hundreds of times to make a single purchase.

One reason mainlanders are buying insurance policies in Hong Kong is that it is a way to move money out of the country legally, and that demand is one thing that is unlikely to change.