Hong Kong Insurance Sales Albeit Covid19

Hong Kong insurance companies are developing more online sales channels and introducing more medical and retirement products to boost sales as the sector is poised for its worst slump on record.

Mainland Chinese, until now huge spenders on Hong Kong insurance policies, spent only HK$839 million (US$108 million) on them in the second quarter, down 85 per cent from the first three months. In the first half, their spending dropped 76% year on year.

Coronavirus travel restrictions have prevented mainlanders visiting Hong Kong to buy the policies. Total new sales of life insurance in the first half-year dropped 34 per cent from a year earlier. If the trend continues, it will be the worst slump on record, bypassing 2008 when sales dropped 25 per cent during the year.

To cope with the challenges, HKFI earlier this month introduced a virtual platform to assist insurance companies in developing online sales channels.Local insurers have also been selling more medical and retirement products to Hong Kong customers since April last year when the government introduced tax incentives for these products.

The HKFI is also working closely with the Insurance Authority and its mainland equivalent to introduce the so-called "Insurance Connect" in the Greater Bay Area, Hui said. The plan, which has no launch date yet, will allow the HKFI to rent office space in Shenzhen, Zhuhai and Guangzhou. The three services centres will allow Hong Kong insurers to provide post-sale services to clients, and hopefully expand to cross-border sales in the longer term.

HSBC Life, AIA and BOC Life have all seen more online sales this year. HSBC Life's digital sales rose 5 per cent year on year in the first half of 2020, with one in four of its protection policies sold via online channels. The insurer introduced video conference services for its staff to explain policies to customers.

Bank of China Life saw its online sales in the first half double from a year earlier. AIA, the largest insurer in Hong Kong, allows thousands of salespeople to use telephone, video conference and other online tools to sell policies.

The pandemic led to greater demand from customers for medical insurance products. HSBC Life launched a new medical plan in July that offers HK$40 million of coverage per year, the highest amount in the city.