HK’s in­sur­ance stocks take a hit

Shares re­treat af­ter UnionPay tight­ens up on pay­ment sys­tem for prod­ucts sold in sec­tor

China Daily (USA) - - BUSINESS - By CHAIHUA in Hong Kong grace@chi­nadai­lyhk.com

In­sur­ance com­pa­nies’ shares fell in Hong Kong on Mon­day, af­ter main­land’s big­gest bank card provider Unionpay tight­ened up on pay­ments for Hong Kong in­sur­ance prod­ucts over the week­end.

Ma­jor play­ers AIA Group Ltd and Pru­den­tial Plc fell 4.77 per­cent and 2.8 per­cent re­spec­tively in Hong Kong at the­close of­tradin­gonMon­day.

On Oct 28, a story say­ing Unionpay In­ter­na­tional would sus­pend all in­sur­ance pay­ment ac­cess in Hong Kong made a splash in main­land me­dia and many main­lan­ders rushed to the SAR to catch the last op­por­tu­nity — some even by plane.

A Hong Kong in­sur­ance agent sur­named Yip told China Daily that a clien­twhowas con­sid­er­ing sign­ing an in­sur­ance pol­icy im­me­di­ately went to Hong Kong to make the deal on Fri­day night af­ter hear­ing the news.

The client swiped Unionpay card over his 300 times to fin­ish the pay­ment for his life in­sur­ance, Yip said.

UnionPay in Fe­bru­ary capped over­seas in­sur­ance prod­uct pur­chases at $5,000 per pay­ment.

He said al­most all clients choose to swipe the Unionpay card for the first pay­ment, which is usu­ally a large amount, but now most in­sur­ance agen­cies in Hong Kong have sus­pended the pay­ment method, so he wor­ried many of his “big clients” would quit af­ter “the most con­ve­nient pay­ment method had dis­ap­peared”.

An agent in­Hong Kong for Pru­den­tial, a UK in­sur­ance com­pany, con­firmed pay­ments of around 20,000 yuan ($2,940) for poli­cies could still be made with the Unionpay card.

Unionpay In­ter­na­tional de­nied on Satur­day it had launched any new reg­u­la­tions, say­ing that pay­ment with Unionpay for in­vest­ment in­sur­ance prod­uct has al­ways been for­bid­den, but it can be used to pur­chase travel, ac­ci­dent and dis­ease poli­cies.

Unionpay said in a state­ment that it found that the trans­ac­tion vol­ume of some over­seas in­sur­ance com­pa­nies sharply in­creased re­cently, so it needed to re­it­er­ate its su­per­vi­sion reg­u­la­tions.

The lat­est curbs will af­fect more than 20 per­cent of AIA’s an­nu­al­ized new pre­mi­ums, a gauge of new pol­icy sales, in Hong Kong. They will re­duce AIA’s over­all new busi­ness value, the pro­jected prof­itabil­ity of new poli­cies, by about 5 per­cent, China In­ter­na­tional Cap­i­tal Corp was quoted as say­ing by Bloomberg.

Com­pared with main­land prod­ucts, Hong Kong’s in­sur­ance poli­cies of­fer higher re­turns, so they are pop­u­lar among main­lan­ders, said Ju Lan, di­rec­tor of the Risk Man­age­ment and In­sur­ance Re­search Cen­ter at the Shen­zhen-based HSBC Busi­ness School of Pek­ingUniver­sity.

But she said the rea­son for the re­mark­able surge in main­land in­vestors this year was the ren­minbi’s de­pre­ci­a­tion.

She said it be­comes a method to avoid risks and al­lo­cate their as­sets glob­ally be­cause Hong Kong in­sur­ance are as­sets in­Hong Kong dol­lars, while the yuan is ex­pected to weaken fur­ther.

de­gree that new curbs will af­fect AIA’s an­nual new pre­mi­ums

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