In recent years, the trend of mainland Chinese consumers traveling to Hong Kong for insurance purchases has gained significant momentumData indicates that the total value of insurance bought by these consumers in Hong Kong has reached several hundred billion Hong Kong dollars over the past two yearsThis phenomenon illustrates not only the allure of the Hong Kong insurance market but also raises concerns regarding the potential risks that accompany such decisions.

During interviews with industry experts, it became apparent that the primary attractions of the Hong Kong insurance market for mainland consumers stem from product flexibility, higher investment returns, and the availability of multiple currenciesChen Hui, the Director of the China Actuarial Science Laboratory at the Central University of Finance and Economics, pointed out that the premiums for Hong Kong insurance products are relatively reasonable

They offer wide coverage, especially in terms of investment returns and long-term protection, which positions them as a competitive choiceFurthermore, these products allow investors to diversify their asset allocation internationally, making them appealing to mainland consumersZhang Jie, a senior partner at Mingya Insurance Brokerage, mentioned that with regard to Hong Kong's participating whole life insurance, it can secure the capital principle in the medium to long term, with expected internal rates of return (IRR) surpassing 6%. This high anticipated yield drives many investors to consider insurance policies in Hong Kong.

However, despite the substantial appeal of Hong Kong-based insurance products, it is crucial for investors to be wary of several key factors when choosing to purchase insurance in this region, to safeguard their legal rights and ensure their funds are secureAccording to Chen Hui, residents from mainland China must personally visit Hong Kong to sign insurance contracts

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Any attempt to purchase Hong Kong insurance through mainland intermediaries or remote transactions is considered illegalThus, consumers are advised to exercise caution with agents promising a full-service approach without the need to travel to Hong Kong, to avoid falling into the trap of “underground policies.”

While the opportunity to buy insurance in Hong Kong presents more investment options for mainland investors, it does not eliminate risks entirelyIn terms of currency risk, Chen Hui emphasized that since many insurance products are priced in Hong Kong dollars or US dollars, the value of the assets invested will fluctuate with exchange rate variations, necessitating a careful consideration of this aspect before making a purchase.

The enticing prospect of high returns on Hong Kong insurance products must also be approached with caution; it is important to understand that projected returns on participating life insurance are not guaranteed

Zhang Jie elaborated that the high yields showcased by Hong Kong insurance products are usually predicated on certain market assumptions and do not assure definite outcomesTherefore, investors should maintain realistic expectations regarding these projected returns when considering insurance purchases.

Additionally, it is crucial to avoid participating in any commission-based behaviorsZhang Jie highlighted that commission-paying practices among agents are taken very seriously under Hong Kong lawConsumers should refrain from soliciting commissions from agents and reject any offers made by agents for delivering such paymentsEngaging in such practices could not only compromise the legality of insurance policies but might also expose agents to penalties, including potential legal liabilities.

As the trend of purchasing insurance in Hong Kong continues to swell, some latent legal and market risks are becoming increasingly visible

The differences in financial regulations between mainland China and Hong Kong, coupled with some market participants' illegal activities, pose safety risks to consumer investmentsInstances of “underground policies,” which refer to insurance products acquired through unapproved channels, introduce significant challenges as these policies may not align with mainland legal requirements and could face legal hurdles during claims processesFurthermore, insurance agents soliciting business in mainland China are also engaging in illegal activities, and any related policies would lack the protection from regulatory bodies in Hong Kong.

In response to the emerging challenges faced by consumers, regulatory bodies in both mainland China and Hong Kong have ramped up their efforts to combat illegal practicesRecently, the Guangdong Financial Regulatory Bureau launched a special governance initiative aimed at investigating the unlawful sale of overseas insurance products and improper cross-border insurance activities, requiring institutions to submit self-inspection reports

Over the past few years, the regulatory environment in the Hong Kong insurance market has gradually tightenedThis year, the Hong Kong Insurance Authority made it clear that it would adopt a “zero-tolerance” approach towards unauthorized sales, insisting that any individual engaged in recommending or selling Hong Kong insurance must possess a valid insurance agent licenseOperating without such a license could render consumers’ policies invalid, exposing them to the risk of being unable to claim their insurance benefits.

Despite the historically strong attraction of the Hong Kong insurance market for mainland investors, the first half of this year has witnessed a decline in new premiums from mainland visitorsIndustry insiders attribute this drop to stricter regulations and previous oversaturation in the marketAs policies continue to evolve and market dynamics change, the fervor for obtaining insurance in Hong Kong may gradually recede