White Collar | Hong Kong must tighten rules for insurers after China watchdog’s warnings
Soon-to-be-established industry authority must prioritise greater regulation. Hong Kong’s reputation as a financial centre is at stake.
Imagine 10 or 20 years from now — those Chinese mainlanders who purchased some 24 per cent of the Hong Kong life insurance policies last year find the returns are much lower than they expected; it may well bring a flood of complaints.
This risks Hong Kong’s reputation as an international financial centre. The soon-to-be-established Insurance Authority must take the issue on as a priority.
It also explains why China’s insurance regulator warned mainlanders buying life policies in Hong Kong to be aware of doing so.
On Friday the China Insurance Regulatory Commission (CIRC) said on its website that life policies bought in Hong Kong would not be protected by mainland law. The regulator also asked the mainland public to be aware of that Hong Kong has no regulations on dividend or cash value. It said China has tighter regulation in these areas.
The warning came after mainlanders spent HK$31.6 billion, or 24.2 per cent of the total new premiums of all life policies sold in Hong Kong last year, up from just 6 per cent in 2009. Mainlanders like to come to Hong Kong to buy US- and Hong Kong-dollar policies to escape the exchange loss after the yuan weakened.
In light of this, Hong Kong must put in place measures to prevent any policy misselling or misunderstanding of its insurance industry.
