Insurers entering the Hong Kong market are having to seek out younger and more elderly customers as the anti-government protests have led to a sharp fall in mainlanders visiting the city to buy life and medical insurance products.
Insurance sales to mainland Chinese customers have dropped by an estimated 30 per cent during the increasingly violent pro-democracy rallies that have plagued the city since early June, according to industry players. Regulations require mainlanders must be in Hong Kong in person to buy insurance products.
The sales have been a hugely important source of income for the city's insurers, so they are desperate to tap new types of customer to plug the gap.
Well Link Life Insurance Company, which received a licence in April and started to sell products in August, is focusing on customers aged 50 and over, offering them retirement and medical products. It primarily aims its medical insurance at those aged between 55 and 75, while it offers a number of savings products for retirement needs.
"We would like to serve mainland customers. However, as fewer mainlanders are coming now amid the social unrest, we are first focusing on the Hong Kong customers, particularly the grey-haired group aged above 50," said Thomas Lee Mun-nang, chief executive of Well Link.
"There are 3.1 million people in Hong Kong who are 50 years old or above, while this will increase to 4.25 million in 10 years, which will be more than half of the Hong Kong population at about 7.5 million now. The grey-haired customers can bring in huge business opportunities for us.
"There are not many insurance companies eyeing this age group, which could give us opportunities to capture these customers."
The company sells its products through 40 insurance brokers, while it plans to hire about 200 agents next year, Lee said.
Bowtie Insurance, which won the first virtual life insurance licence to be granted by the Insurance Authority in December, is not allowed to hire agents and can only sell products online. Its target clients are at the other end of the age spectrum.
"We do not focus on mainland customers, but we are eyeing the young customers who like to shop online. We focus on the medical products and protection products," said Fred Ngan Yiu-fai, co-founder and co-chief executive of Bowtie.
Bowtie and Well Link are among the scores of insurers to offer the Voluntary Health Insurance Scheme, which is a tax-deductible scheme introduced by the Hong Kong government in April. It offers tax incentives of HK$8,000 per person per year to buy health insurance policies to cover up to HK$420,000 in medical costs annually up to the age of 100.
Bowtie recently began to cover the medical costs for injuries caused by accidents. It has hired Hong Kong's former Financial Secretary John Tsang Chun-wah as its senior adviser to promote its products via Facebook and other social media.
"Social media is widely used by many young people. The image of Mr John Tsang, who has many young fans, also helps to reach our target customers," Ngan said. "Many young customers do not have much money. Direct sales online, where there is no need to pay any commission to a middleman helps keep our price cheaper."
In the first half of the year, before the protests began, mainlanders spent HK$26.33 billion buying life insurance policies in Hong Kong, up 18 per cent from a year earlier. They represented 26 per cent of all life insurance sales in the city.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.