A proposed new “insurance connect” scheme to allow cross-border sales of insurance products between Hong Kong and mainland China is on hold because of economic uncertainties arising from the trade war and the unprecedented social unrest that has rocked Hong Kong for the last three months.
“The talks about setting up an insurance connect scheme will definitely be delayed as a result of the challenges of international business operating environment as a result of the ongoing US-China trade war. It would be hard to launch a new connect scheme under the current economic situation,” said Insurance Authority chairman Moses Cheng Mo-chi on Monday.
Cheng revealed in June last year that the authority has been in talks with its mainland counterparts to establish a special channel for the marketing, sale and processing of insurance products, using a model pioneered in the stock connect schemes that now link the stock markets of Shanghai and Shenzhen with Hong Kong. A bond connect scheme was added in 2017.
Moses Cheng Mo-chi, chairman of the Insurance Authority, said: ‘It would be hard to launch a new connect scheme under the current economic situation.’ Photo: Edmond So alt=Moses Cheng Mo-chi, chairman of the Insurance Authority, said: ‘It would be hard to launch a new connect scheme under the current economic situation.’ Photo: Edmond So
Cheng said while the service centres in the bay area remain on the agenda, a full-scale insurance connect would be delayed. The trade war has dragged China’s economic growth down to 6.2 per cent in the second quarter, its weakest pace in at least 27 years.
The unprecedented anti-government protests in Hong Kong, which started peacefully on June 9 in opposition to a now withdrawn extradition bill, have turned increasingly violent and led to a sharp fall in tourist numbers.
Some insurers believe sales to mainlanders have dropped by more than 20 per cent year on year over the last two months. At present, mainlanders must come to Hong Kong in person to buy the policies.
“Just like any other retail business, the insurance sales to the mainlanders are affected by the decline of tourists,” Cheng said. “We would need to wait until everything has calmed down and the economic situation has improved to study the new connect scheme.”
Cheng made his comments at a briefing on Monday to launch a new licensing regime for insurers that will bring to an end the current system of self-regulation in the industry.
From September 23, any new insurance salespeople or brokers in the city must apply for a licence from the Insurance Authority before they can sell policies.
The existing 110,000 agents must apply within the next three years and will be exempted from new qualification requirements that new applicants must meet. All must adhere to strict new conduct rules and regular training required to enhance the protection of policyholders.
Those who breach the rules will face a fine of up to HK$10 million or three times the profits made by the salesperson, whichever is higher, the watchdog said.
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.