Hong Kong’s insurance sales have taken a hit in the past two months, as almost daily street protests – particularly in districts frequented by mainland Chinese visitors such as Tsim Sha Tsui and Mong Kok – have kept them away.
Policy sales have fallen by between 10 per cent and 20 per cent since June, according to Altruist Financial Group, which provides financial planning services in Hong Kong.
“Insurance sales are down with locals buying less, and mainland visitors are also buying less,” said Altruist’s chief operating officer Glenn Turner. “People are using their mobile phones to track all the things going on in the protests and have not paid attention to insurance cover.”
The decline is bad news for Hong Kong’s 70 life insurers and their combined sales force of 90,000 agents, especially those niche companies whose entire business model is aimed at selling various packages of health, medical or retirement plans to Chinese customers.
Mainland clients bought HK$12.77 billion (US$1.63 billion) of life and medical insurance policies in Hong Kong during the first quarter, or 26.4 per cent of all premium income sold during the three months, according to the Insurance Authority’s data.
At their peak in 2016, Chinese customers bought 39 per cent of all new insurance policies sold in Hong Kong, as they sought alternatives to hedge against a deteriorating yuan.
Hong Kong has faced an unprecedented level of public unrest ever since an estimated 1 million protesters marched on the streets on June 9 to oppose an unpopular extradition bill.
Even though the bill had been declared “dead” by the city’s Chief Executive Carrie Lam Cheng Yuet-ngor, protests had persisted, and had deteriorated into mayhem, with police resorting to tear gas, pepper spray and rubber bullets in their daily clashes with mobs of protesters.
The escalation of violence had sapped business sentiment, reducing foot traffic in shopping centres and crimping retail sales. Real estate sales, a key barometer of consumer sentiment in land-scarce Hong Kong, plunged as homebuyers were reluctant to commit to large purchases at a time of uncertainty.
Stock market transactions and fundraising activities shrank, with three companies deferring a combined US$11 billion of initial public offerings (IPOs) since June.
Tourist arrivals to Hong Kong plunged by 26 per cent at the end of July, from 1.5 per cent in the middle of the month when compared with the same period last year, Commerce Secretary Edward Yau Tang-wah said last week. The decrease widened to 31 per cent in early August, from last year, the data showed.
Declines in visitor arrivals crimp insurance sales because Hong Kong law requires mainlanders to present themselves in person to a sales agent, before any contract can be executed. The drop in business had been particularly badly felt by agents in Tsim Sha Tsui, Mong Kok, Causeway Bay and Admiralty, the districts where some of the most frequent and most visible protest clashes had taken place.
It was a slump that not even a deteriorating renminbi could offset. Mainland customers bought HK$72.68 billion of insurance policies in 2016 when the yuan weakened by 7 per cent against the US dollar, as they sought to park their capital in higher-yielding investments to offset the declining yuan, said Chan Kin-por, a Hong Kong lawmaker who represents the insurance sector.
The Chinese currency weakened to 7 yuan per US dollar last week, setting off a tweet by US President Donald Trump, who labelled China’s monetary authorities as a “currency manipulator.” But this time, the weakening yuan won’t lead to an influx of mainland Chinese insurance customers to Hong Kong, agents said.
Sales have dropped by 20 per cent since June, said an agent who would only be identified by his surname Wong.
“Neither mainlanders nor Hongkongers are in the mood to buy insurance products,” said Wong, who had been an agent for two years. “The atmosphere is gloomy, the traffic is bad, and we cannot visit clients around the city because the bus and the subway are blocked by protesters.”
“Many mainlanders feel unwelcomed and unwanted in Hong Kong, so they have stopped coming altogether. The hardest hit agents are those who rely on mainland customers. Some of them failed to sell anything over the past two months. It is zero commission for them. It is a hard time for these agents.”
More from South China Morning Post:
- Hong Kong’s stockbrokers face a bleak second half as job cuts loom amid shrinking trading volume and dwindling fundraising plans
- Hong Kong’s property buyers are rushing for the sidelines to wait out city’s festering political crisis and almost-daily protest rallies
- Hong Kong insurers thumped by 37pc plummet in life premiums paid by mainlanders