HK insurers see Bay Area offering 'new life' for industry

A prominent Hong Kong insurance business executive has painted a rosy picture for the industry, pointing to the enormous opportunities offered by the integration of the Guangdong-Hong Kong-Macao Greater Bay Area.

At the second session of the 13th National People's Congress and the National Committee of the Chinese People's Political Consultative Conference in Beijing, industry insiders said they've found many newcomers being drawn by the strategy and swarming into Hong Kong's insurance market.

The blueprint for the Bay Area's development, which was unveiled last month, mentioned the insurance sector 15 times, including marine insurance, reinsurance, as well as cross-boundary motor vehicle and medical insurance products.

Hong Kong's insurance products have been popular on the Chinese mainland for many years. Between 2007 and 2016, the percentage of new premiums for policies sold to mainland visitors by insurers in Hong Kong had surged from 6.5 percent to more than 40 percent. But, since 2017, it has dwindled due to tighter capital controls.

Bernard Charnwut Chan - an NPC deputy from Hong Kong and president of Asia Insurance - believes the national strategy to develop the Bay Area will make the special administrative region's insurance business thrive again.

In an interview with China Daily on the sidelines of the two sessions, he said he has found many companies that had never been in the industry setting up new insurance institutions in Hong Kong.

These enterprises are coming in because they want to promote insurance products on the mainland, where a growing number of people from the middle class are attaching greater importance to their children's education or life after retirement.

The most promising category, Chan believes, is life insurance, which has been growing by 10 to 20 percent in the past decade, with most of its buyers from the mainland. It is showing stronger momentum than property insurance and reinsurance.

He is confident that the industry will grow at a similar pace in one or two years, and the future potential will be larger.

The Bay Area, with a total population of 70 million, is a huge market even if only 5 percent of them were to buy insurance products from Hong Kong, he said.

More importantly, taking a leaf from the successful practices undertaken in the Guangdong pilot zone, Hong Kong could access the entire mainland market of 1.3 billion people in future, said Chan.

However, he admitted it's difficult to set up new insurance branches on the mainland at present due to barriers in licensing regulations and branding costs.

He explained that participating in the Bay Area's development does not mean "we have to go up north we could still get on board by staying in Hong Kong."

His solution is to find a mainland partner which, he believes, would be more feasible and effective. It would also solve the problem of the lack of claim services of Hong Kong insurance companies on the mainland. He said this should be the first hurdle to overcome in order to link up the cross-boundary insurance markets.

Chan, who's also the non-official convener of the Executive Council of the Hong Kong SAR, revealed that the SAR government is already discussing with the authorities in Beijing about how to deal with the problem.

The Bay Area blueprint also pledged support in facilitating services for cross-boundary policyholders in areas like underwriting, investigation and making claims.

Samuel Yung Wing-ki - another Hong Kong insurance pioneer and a member of the CPPCC National Committee, as well as executive district director of AIA International - offered an alternative solution.

He noted that due to tight capital controls, mainland residents are having trouble transferring their premium to Hong Kong insurers, and the amount claimed could not be deposited directly into their mainland banking accounts either.

He proposed creating a life insurance service center in Hong Kong to collect the premium from mainland buyers, and send their claims to a designated bank account in the Bay Area.

The Bay Area's development outline also mentioned establishing a Bay Area international commercial bank in the Guangdong Pilot Free Trade Zone and pursuing pilot initiatives in cross-boundary use of RMB.