Several months of anti-government protests in Hong Kong have had a huge impact on several industries in the city, one of which is the life insurance sector.
Before the civil unrest broke out on a large scale in June 2019, the sale of life insurance products to mainland Chinese visitors was a huge contributor to the industry’s revenues, as well as a favoured method for buyers to take their money out of the mainland.
According to Hong Kong’s Insurance Authority, the value of new life insurance policies taken out by mainland citizens decreased by 18% to HK$1.2 billion in the three months to September 2019, the Financial Times reported. Analysts have cautioned that sales have deteriorated even further, as the demonstrations have caused a rise in anti-mainlander sentiment and sharply reduced tourist arrivals.
In November 2019, the number of tourists from the mainland dropped by 60% year-on-year, the report said.
Two of the largest life insurers in Hong Kong, AIA and Prudential, used to get up to 60% of their sales from mainland Chinese tourists, who need to be physically present in the territory in order to buy insurance.
Chinese customers are a “key driver” of Hong Kong’s insurance sector, according to Frank Yuen, senior analyst at Moody’s Investors Service.
“Without the protests, this year would be another strong year,” he was quoted as saying in the report.
In order to combat the decrease in visitor arrivals, the report said that several insurers have resorted to transporting customers by bus from the mainland to parts of Hong Kong that are unaffected by protests, in order to allay customers’ fears about their safety. The protests are also likely to further encourage insurers to expand in mainland China, so as not to lose a vital source of revenue.
