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WeChat chats fuel China money exodus into Hong Kong policies

[HONG KONG] Here's how to sell Hong Kong insurance policies to mainland Chinese these days: Sit back, wait. Occasionally check your phone. Forget about restrictions imposed by mainland regulators trying to halt the exodus of billions of yuan out of China and into Hong Kong policy purchases.

For Hong Kong part-time agent Wen, who declined to give her first name, it's been that easy to make money. 

After she posted a few remarks about insurance on WeChat, the popular Chinese instant-messaging service, her first three clients flew in from China at their own expense. She netted HK$130,000 (S$22,800) in commissions in the first month alone.

"People just come to me because my friends also tell their friends," said Ms Wen, 30, who started selling insurance in June while on maternity leave from a job where she has to work four months to make the same money. "I thought I wouldn't be getting any clients when I started."

An insurance buying frenzy by mainland Chinese in Hong Kong is being driven in part by such chatter on WeChat. As agents fear increased scrutiny by Chinese regulators, they're shifting to quieter practices such as general posts on social media, instead of organising public seminars and other more direct methods used previously on the mainland.

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Ms Wen and other Hong Kong-based agents interviewed declined to give their full names lest they draw attention as the pace of insurance sales continues to surge to record levels. 

On Wednesday, Hong Kong's Office of the Commissioner of Insurance said sales to mainland Chinese visitors more than doubled in the second quarter to reach HK$16.9 billion after already nearly doubling in the first quarter.

That puts first half sales of HK$30.1 billion close to the total HK$31.6 billion for all of 2015, which was already a 30 per cent increase from the previous year.

Demand is so great that recent moves by mainland regulators to clamp down on the purchases have had little dampening effect, according to Hong Kong agents. The boom has lifted the earnings of Prudential and AIA Group, with Prudential saying last month that mainland Chinese purchases helped boost its Hong Kong insurance sales by 58 per cent in the first half of 2016.

AIA said new premiums in Hong Kong rose 83 per cent in the same period, after receiving a "significant uplift" from China.

Spokesmen for both companies declined to comment.

"No matter what the new restrictions are, both the sellers and buyers have their own ways of getting around them," said Hu Xingdou, an economics professor at the School of Humanities and Social Sciences at Beijing Institute of Technology. "The government knows they have to turn a blind eye to a certain extent, because they know they can't completely shut the door."

The most popular policies in the city, Hong Kong agents say, are those that combine a life insurance element and an investment component. These can be cashed out after a few years, at which point the money can be used for property investment or other purposes, raising fewer questions about how the money left the Chinese mainland.

Hong Kong's insurance regulator last year warned of growing money laundering risks through the policies. Such outflows accelerated last year amid a corruption crackdown at home and fears that the yuan would continue to weaken.


Sales are also driven by the sense among many mainland Chinese that Hong Kong life and medical insurance products are superior to those sold in China.

"Chinese people are now more aware of Hong Kong insurance products, and they would actively find their way to buy insurance here," said Steven Lam, a Hong Kong-based insurance analyst with Bloomberg Intelligence. "The buying trend has touched the nerve of the Chinese government and led to the restrictions we've seen."

In the latest restriction, the China Insurance Regulatory Commission told its branches to investigate sales of overseas insurance policies on the mainland, Caixin magazine reported in May. The marketing of such policies inside China, through investment seminars or other public sessions, is prohibited.


Hong Kong's Office of the Commissioner of Insurance said in a statement in July that brokers may be violating China's rules by engaging in cross-border marketing and sales of products to China residents via social media. Mainland buyers are also required as of Thursday to sign an acknowledgment that they understand the risks of the policies they buy.

In February, mainland regulators limited the use of China UnionPay cards to buy policies to small transactions. In response, some buyers swiped cards hundreds of times to make a single purchase.

The practice shows just how eager Chinese remain to move money abroad amid a weakening economy and expectations of further declines in the yuan.

Insurance sellers say they have since taken a quieter marketing strategy as they've come under further scrutiny. For example, wealth managers on the mainland disguise meetings intended to sell insurance as general investment seminars and resort to more one-on-one meetings with potential customers, according to agents. Hong Kong agents say they've been able to sell the policies just as effectively through texts or WeChat.

"If I post news on WeChat Moments, I can only say Hong Kong insurance has many advantages, but that's it. We can't say too much," said Ms Li, a 35-year-old agent based in Hong Kong who only gave her surname. "We are more cautious, but we're really fine."

She said she's selling more critical illness and medical policies as people start to realize the importance of health coverage as well as investment, leading to a 200 per cent rise in her sales so far this year from 2015 and a 10 to 20 per cent jump in premiums in the first half.

Ms Wang, an agent in Hong Kong, said that some moves by China's regulators intended to curb the insurance sales have actually had the opposite effect and increased demand.

For example, when the CIRC pointed out that the Hong Kong policies aren't covered by Chinese law, in an attempt to deter purchases, it only served to highlight that they come under Hong Kong law where legal protections are better, Ms Wang said.

For some Hong Kong agents, it's an easy way to add to the regular paycheck.

"I never have to make cold calls or do anything aggressive to boost sales," said Wang, 33, another Hong Kong-based agent, who was born in Beijing. "News spreads quickly over WeChat. The message just goes from one to another."


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