An Insurance Connect scheme has been proposed, after it was revealed that fewer mainland Chinese were buying insurance from Hong Kong.
The scheme follows the earlier Stock Connect and Bond Connect schemes that allowed investors in both Hong Kong and mainland China to trade on the other market.
The creation of an Insurance Connect scheme would serve to “reboot” interest by mainlanders in buying insurance policies written in Hong Kong, according to an editorial in the
South China Morning Post.
Mainlanders spent just HKD40.4 billion on Hong Kong insurance policies for the first three quarters of 2017, down 17% from the HKD49 billion spent during the same period last year, data from the Hong Kong Insurance Authority revealed.
The main reasons cited for the drop-off are Chinese regulatory pressures from Beijing, as well as the recovery of the yuan.
“The ‘Connect’ concept clearly works at generating cross-border trading and boosts the internationalisation of yuan,” the editorial said. “We have seen more cross-border trading of stocks, bonds and funds but insurance sector now appears to be missing the boat.”
It argued that if regulators are able to create a good framework between the two markets it would serve the Hong Kong insurance sector well, as one of its major sources of revenue is currently drying up.
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