The sale of life insurance products to Chinese tourists has been rocked by months of unrest in Hong Kong, with the value of new life insurance policies taken out by mainland citizens dropping 18% to $1.2bn in the three months to September.
Amid political unrest, the number of tourists from mainland China dropped by 55%, and this is one of the main reasons for the decrease in sales, as Hong Kong regulations require visitors from the mainland to be physically present to purchase insurance.
"Fourth-quarter momentum will be even worse than the third quarter because protests accelerated in September, October and November. It will be a big challenge," Shengbo Tang, an analyst at Nomura told the Financial Times.
Fourth-quarter momentum will be even worse than the third quarter because protests accelerated"
Two of the biggest life insurers in the territory, AIA and Prudential, get up to 60% of their new business in Hong Kong from mainland Chinese customers, according to an analyst.
"The overall insurance industry in Hong Kong reported strong growth in the first half of last year, but the situation turned around in the second half because of the social unrest that started in mid-2019," Prudential Hong Kong CEO Derek Yung Kai-ming told SCMP.
"Luckily, we promoted the tax-deductible medical scheme, as well as the tax-deductible annuity product. Sales of these two types of products to Hong Kongers have been strong because of tax incentives."
In order to counter the slowdown, some life insurers have begun offering transportation services whereby prospective Chinese customers are picked up from the airport or land border with the mainland to parts of Hong Kong that have not yet been affected by the protests, people familiar with the industry said. The protests have also encouraged some insurers to bring forward plans to expand in the mainland