Travel insurance

Mainland tourists add insurance to shopping list


Next stop, the insurance agent

With Hong Kong’s Occupy protests now well into their fourth week, many businesses in the territory have become increasingly impatient. This Monday, a restaurant owner and a supermarket proprietor filed claims against the protesters, saying the movement had caused losses to their businesses. A group of taxi drivers also applied for an injunction to block participants in the movement from occupying roads in Mongkok, a major shopping area in the city.

But it’s not only restaurants and retailers that have been hampered by the protests. As it turns out, insurance sales have also taken a hit because of the drop in mainland tourists.

That’s because many visitors from China are putting insurance – along with milk powder and iPhones – on their shopping list when they come to the city.

In the first half of this year alone, mainland investors purchased an estimated $1.3 billion worth of insurance products in Hong Kong, accounting for 18.4% of all new policies written in the city. The growth rate in Hong Kong far surpasses that of mainland China too. The total value of insurance sold to visiting mainlanders has been increasing at over 50% year-on-year in the city since 2010. In comparison, China’s insurance industry has increased at a rate of 10% a year, says NetEase, a portal.

“Many mainlanders have put life insurance policies on their shopping list, along with cosmetic products, gold jewellery and baby formula, when they travel to Hong Kong,” Chan Kin-por, the legislator representing insurers in Hong Kong, told the South China Morning Post. “They are now the major driving force behind the growth in Hong Kong life insurance sales.”

Even though Hong Kong insurance agents are barred from selling products in China, mainlanders can buy policies from Hong Kong agents or banks when they travel across the border. That explains why many of the city’s insurers have been hiring staff from China to pitch the products to visitors. Beijing Youth Daily says many even offer free shuttle buses from the airport to bring prospective clients to their offices.

Some insurance agents have taken to promoting themselves on travel websites too. “Going to Hong Kong for shopping is so outdated. Buy insurance to make your trip truly worthwhile,” is one tagline.

But why cross the border to buy insurance? One reason is that the policies in Hong Kong come with a lot more investment choices. More flexible terms and conditions are also available. In contrast, products sold in China are highly regulated and provide fewer options for customers.

Perhaps more importantly, industry observers say that for the same policy and coverage, premiums in Hong Kong are generally lower by about a third. NetEase reckons the price discrepancy is due to the fact that competition in Hong Kong is much greater, which drives prices lower. Hong Kong buyers of personal insurance also live longer and are generally healthier than their mainland counterparts so the coverage tends to be more favourable, Hu Bo, an expert, told Beijing Youth Daily.

The quality of customer service also plays a role. Hong Kong insurers are more efficient with processing claims, Chinese buyers say. One consumer told Beijing Youth Daily that when he injured his arm in China, it only took a week after submitting his hospital bills before he was paid. The same process often drags on so long in China that customers joke that the cheques arrive long after the patient is dead.

Other consumers say they are also more confident with Hong Kong’s legal system in the event there is a dispute.

As more mainland tourists come to Hong Kong to purchase insurance, will it threaten China’s domestic insurers? Hu Bo admits that the competition is very real. “There is no denying that there are clear advantages to purchasing insurance products in Hong Kong. It’s just like iPhones – they’re cheaper in Hong Kong and that’s why consumers in China are coming to the city to buy the latest gadgets,” he says.

“But it may not be a bad thing. It could help lift the competitiveness of the Chinese insurance industry as a whole.”

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