Covid Strangles Hong Kong Life Insurance

Sales of life insurance policies in Hong Kong plummeted last year as border restrictions meant mainlanders could not visit the city to buy them. Total sales of new policies dropped 22.8 per cent from a year earlier to HK$133.4 billion (US$17.19 billion). That is the second-worst slump on record, after a drop of 25 per cent that followed the 2008 global financial crisis.

Mainland Chinese –the biggest spenders on Hong Kong insurance policies before the pandemic started early last year – forked out 84% less in 2020 as the outbreak brought cross-border traffic to a standstill. They only spent HK$6.8 billion (US$875 million) on life and medical insurance policies in Hong Kong, just 5.1 per cent of the total.

It is the smallest amount in a decade. At the peak, in 2016, they bought HK$72.68 billion worth of policies, representing 39 per cent of all premiums collected in the city.

The Insurance Authority blamed the plunge on cross-border travel restrictions that brought tourist arrivals to a standstill. Since March last year, overseas visitors have needed to be quarantined for 14 days – later expanded to 21 days – on arrival in Hong Kong, while mainlanders returning home would have had to undergo another 14 days of quarantine.

The number of mainland visitors to the city dropped 93.8 per cent year to 2.7 million last year, according to the Hong Kong Tourism Board.Mainland tourists must buy their insurance products in person in the city under the law, so the sharp fall in visitors hit the industry and its 100,000 salespeople hard last year.

The trend is expected to continue in the first quarter of this year as the city continues to battle the coronavirus, with a possible fifth wave of infections looming this week. Hundreds of people needed to be quarantined after some bankers and their families were linked to an outbreak at a popular gym in Sai Ying Pun.