HK insurance buyers face more curbs
CHINESE RESIDENTS buying insurance in Hong Kong will no longer be able to swipe their credit cards multiple times to get around previously imposed curbs intended to slow sales, according to people with knowledge of the matter.
Purchases of insurance in Hong Kong using MasterCard Inc. and Visa Inc. credit cards issued in China have been capped at $5,000 per insurance product, according to the people, who asked not to be identified because the changes haven’t been made public. Hong Kong insurers were notified by the card companies about the change, which took effect Saturday, the people said.
The new limit means Chinese residents won’t be able to skirt previously imposed restrictions by swiping their credit cards multiple times, a tactic that’s become popular this year, underpinning surging sales in Hong Kong. Chinese authorities began curbing insurance buying in the city early in 2016, fearful that capital is leaving the country too quickly. Rising US interest rates and weakness in the yuan have added urgency to the effort recently.
A representative for MasterCard declined to comment. Officials at Visa and the State Administration of Foreign Exchange weren’t immediately reachable on Saturday.
UNIONPAY CURBS
The authorities this year have already rolled out a series of curbs to control insurance-related outflows. In the past, Hong Kong insurance sellers’ creative responses to limits such as caps on transactions using China UnionPay Co. cards have included swiping customers’ cards hundreds of times.
Since late October, mainland residents have been blocked from using China UnionPay cards to buy life and investment-related polices in Hong Kong. Those restrictions caused purchases using UnionPay cards to dry up as buyers switched to Visa and MasterCard, according to insurance agents.
Mainland buyers won’t be able to exceed the new limit by simultaneously purchasing multiple products from the same insurer, because the credit-card companies will regard it as one overall transaction subject to a $ 5,000 cap, one of the people said.
The most popular insurance policies for Chinese buyers, Hong Kong agents have said, are those that combine a life- insurance element and an investment component. These can be cashed out after a few years and the money used for property investment or other purposes, raising fewer questions about how the money left the Chinese mainland.
Hong Kong’s sales of insurance and related investment policies to Chinese residents surged to a record HK$ 18.9 billion ($ 2.4 billion) in the third quarter, according to numbers derived from figures reported by the Office of the Commissioner of Insurance.
Chinese citizens are allowed to convert up to $50,000 worth of yuan a year into other currencies, and they can move that money abroad for investing purposes regulated under the country’s capital-account policies.