Hong Kong life insurance sales to mainland Chinese visitors surge as border reopening unleashes pent-up demand

“In February, we have seen applications from mainland customers have exceeded pre-pandemic levels,” said Edward Moncreiffe, CEO for Hong Kong operations at HSBC Life.

The company was the number one seller of life insurance policies last year with a market share of 24 percent with new premiums, Insurance Authority data showed.

Moncreiffe believes demand will remain high throughout 2023.

“With borders now open and promotional campaigns to attract tourists underway, we are seeing strong evidence of a pent-up demand for insurance from mainland visitors,” he said.

The big increase in mainland sales in 2022 comes amid a wider slump.

Number of life insurance sales fell 19 percent, the biggest drop in two years, to HK$134.9 billion (US$17.29 billion), Insurance Authority data released on Friday showed.

That follows a 25 percent jump in 2021 and a sharp 23 percent drop in 2020.

Mainland Chinese visitors, the biggest spenders on Hong Kong insurance policies before the pandemic brought cross-border travel to a halt for the past three years, started returning to the city for products in the fourth quarter.

They spend just HK$2.1 billion, or 1.5 per cent of the total, on living and health insurance policy in Hong Kong in 2022, the data shows. While this surpasses the amount in 2021, it is still a long way from HK$43.4 billion in 2019, the last year before the pandemic.

The fourth quarter has seen the strongest recovery so far. Mainlanders spent HK$1.1 billion on life insurance policies in Hong Kong in that period, easily getting through the first nine months when they spent a total of HK$1 billion.

This is because Hong Kong began lifting its hotel quarantine requirements in late September, with mainland China following suit in November, increasing cross-border traffic before fully reopening in January.

According to the Hong Kong Tourism Board, the number of visitors in January tripled from the previous month to nearly half a million. Throughout last year, 604,564 people visited the city – a fraction of the 55.9 million tourists in 2019.

The decline in overall insurance sales last year was partly due to investors eschewing investment-related insurance products amid market volatility. Such policies – a combination of insurance and fund products – saw a sharp decline of 51.6 percent last year to HK$14.9 billion.

“The stock market did not perform well last year, which discouraged investors from buying insurance policies with investment features,” said Selina Lau Pui-ling, CEO of the Hong Kong Federation of Insurers, an industry union representing 138 insurance companies in Hong Kong.

Hong Kong’s Hang Seng Index benchmark lost 15 percent in 2022, while the Hang Seng Technology Index plunged 27 percent. The CSI300 Index, which tracks the 300 largest stocks in Shanghai and Shenzhen, fell 21.5 percent.