Hong Kong is currently seeing a wave of professionals from mainland China’s finance and tech sectors who are dissatisfied with their career prospects and salaries. Many of these individuals are now shifting to the insurance industry in Hong Kong, revitalizing what was once a sluggish sector.
Insurance Industry Growth
Companies such as AIA Group Ltd and Prudential Plc are increasing their recruitment of Chinese citizens to sell insurance policies to mainland visitors. This business, which had faced regulatory challenges in the past, is experiencing a resurgence following a decline during the COVID-19 pandemic.
Since the beginning of 2023, Chinese tourists have spent over HK$75 billion (US$9.6 billion) on insurance policies in Hong Kong. This has occurred despite increased scrutiny from the city’s regulators on illegal selling practices.
Why Insurance is Attractive
Many policies purchased by Chinese tourists are denominated in US dollars or Hong Kong dollars, which allows buyers to move money offshore and invest in long-term plans. These products often include critical illness or term life coverage and have savings features. Buyers view these policies as a way to protect their assets from the weakening yuan and take advantage of Hong Kong’s higher interest rates.
For insurance agents, this boom translates into high commissions. Top agents can earn over HK$10 million a year (more than one million US dollars) plus bonuses, according to unnamed sources.
Recruitment and Sales
Hong Kong insurers cannot directly market their products on the mainland. Instead, agents utilize personal networks to attract Chinese citizens to Hong Kong to purchase policies. Customers typically open Hong Kong bank accounts to transfer money or use credit cards for purchases. China allows individuals to move up to US$50,000 out of the country each year.
Talent Visas
In late 2022, Hong Kong relaxed work visa requirements to uphold its status as a financial hub. The city introduced the Top Talent Pass Scheme, providing two-year visas to job seekers from top universities and qualified individuals. Additionally, the quota for the Quality Migrant Admission Scheme was removed.
Since these changes, about 200,000 people have received Hong Kong work visas, with the majority of talent pass holders coming from mainland China.
At recent meetings, discussions focused on sales strategies, often conducted in Mandarin. Many attendees were new visa holders, ranging in age from 20s to 50s. The advantages of acquiring a Hong Kong passport, which is available after seven years of residency, were also emphasized.
Visa and Earnings
Visa holders under the Top Talent Pass Scheme can extend their visas if they secure jobs with market-level pay. The average salary for Hong Kong insurance agents is HK$473,564 annually, with bonuses averaging HK$66,256.
However, transitioning to this field is not always straightforward. Some new visa holders have faced challenges, such as missing bonuses due to training delays or terminated agreements with insurance companies, leading to grievances filed with Hong Kong’s Insurance Authority.
Regulatory Concerns
Hong Kong regulators are aware of instances where agents buy policies for themselves and report commissions as income. Consequently, the immigration department now requires agents to provide monthly commission statements and verify that sales are made to others.
In June, Hong Kong’s Secretary for Labour and Welfare announced stricter reviews of visa renewal applications from insurance agents.
Future Outlook
Despite regulatory scrutiny, companies anticipate continued growth in selling insurance to mainland visitors. Companies like HSBC Life and Chow Tai Fook Life Insurance Co have reported increasing sales, with a significant portion of policies sold to mainlanders.
Professionals from Shenzhen’s financial sector are moving to Hong Kong to work as insurance agents while pursuing further education. The industry is seen as offering more potential than China’s regulated financial sector, providing opportunities for career growth and income without limits. Many aim to earn sufficient income to cover living expenses and secure a stable future in Hong Kong.
The Impact of Hong Kong’s Insurance Boom on Singapore
Hong Kong’s insurance industry is currently experiencing significant growth, attracting talent from mainland China. This trend could have implications for Singapore’s insurance and financial sectors as well.
Diversification of Insurance Products
Hong Kong’s insurance market is thriving partly due to products that allow Chinese citizens to protect their assets and invest offshore. Singapore could see an opportunity to diversify its own insurance offerings, catering to similar demands from international clients. By providing products denominated in stable currencies like the US dollar and offering attractive savings features, Singaporean insurers can appeal to customers seeking asset protection and higher interest rates.
Regulatory Challenges and Opportunities
Hong Kong’s resurgence in insurance sales, despite regulatory scrutiny, highlights the importance of balancing growth with compliance. Singapore, known for its robust regulatory framework, can leverage its reputation to attract investors and clients seeking a stable and transparent environment. However, Singaporean regulators may need to remain vigilant about potential challenges, such as illegal selling practices, ensuring that growth in the insurance sector aligns with legal standards.
Expansion of Cross-Border Business
The success of Hong Kong’s insurers in attracting mainland Chinese clients underscores the potential for cross-border insurance sales. Singapore could explore similar opportunities, targeting clients from neighboring countries. By capitalizing on its strategic location and strong financial infrastructure, Singapore can position itself as a regional hub for cross-border insurance transactions.
Economic Impact and Job Creation
The growth of Hong Kong’s insurance industry has led to high earnings for top agents, attracting professionals seeking lucrative opportunities. Singapore could experience a similar economic impact if it successfully expands its insurance market. This could lead to job creation and increased economic activity, benefiting the broader financial services sector.
Innovation and Technological Advancements
To compete with Hong Kong and other markets, Singapore’s insurance industry may need to focus on innovation and technological advancements. Embracing digital solutions, such as AI and data analytics, can enhance customer experiences and streamline operations. By investing in technology, Singapore can differentiate itself and attract a tech-savvy clientele.
Future Outlook
As Hong Kong continues to thrive as an insurance hub, Singapore must adapt to remain competitive. By focusing on talent acquisition, product diversification, regulatory compliance, and innovation, Singapore can capitalize on the growth of its insurance sector and maintain its status as a leading financial center in Asia.
