‘Insurance connect’ will be next big step for Greater Bay Area, with two services centres expected to be set up by end of year

Hong Kong and mainland Chinese authorities are hammering out details for the introduction of an “insurance connect” scheme as the next major step in the financial integration of the Greater Bay Area (GBA), two separate sources told the Post.

Under the plan, there will be two service centres in mainland cities within the bay area, with Shenzhen likely to be one of those, a source said.

It will be the second cross-border connect scheme with a focus on the bay area, an ambitious plan to integrate Hong Kong, Macau and nine mainland cities to form an

enormous economic and business hub

Beijing last month announced the introduction of a “wealth management connect” initiative to allow the sale of investment products via banks between all 11 cities.

The Chinese government first produced a blueprint for the bay area in February last year and provided more details in May about how it would promote trade and capital flow among the 11 cities to create an economic powerhouse.

The proposed service centres will adopt a shared office model, the source said. It will allow the Hong Kong Federation of Insurers, the industry body in Hong Kong, to take the lead in renting office space in each of these two cities.

Hong Kong insurance companies will then be allowed to set up counters in the centres to serve their policyholders living in the bay area.

The first stage of the scheme will not involve any cross-border sales of new policies, another source said. Instead, it will allow Hong Kong insurance companies to provide post-sales services such as handling claims, changing policyholders’ information and processing payment of premiums.

Some of Hong Kong’s biggest insurers, such as AIA and Prudential, have been recruiting extra sales agents, confident the bay area will generate new business in the long term. Photo: Bloomberg

Hong Kong and mainland Chinese authorities are hammering out details for the introduction of an “insurance connect” scheme as the next major step in the financial integration of the Greater Bay Area (GBA), two separate sources told the Post.

Under the plan, there will be two service centres in mainland cities within the bay area, with Shenzhen likely to be one of those, a source said.

It will be the second cross-border connect scheme with a focus on the bay area, an ambitious plan to integrate Hong Kong, Macau and nine mainland cities to form an

enormous economic and business hub

. Beijing last month announced the introduction of a “wealth management connect” initiative to allow the sale of investment products via banks between all 11 cities.

The Chinese government first produced a blueprint for the bay area in February last year and provided more details in May about how it would promote trade and capital flow among the 11 cities to create an economic powerhouse.

The proposed service centres will adopt a shared office model, the source said. It will allow the Hong Kong Federation of Insurers, the industry body in Hong Kong, to take the lead in renting office space in each of these two cities.

Hong Kong insurance companies will then be allowed to set up counters in the centres to serve their policyholders living in the bay area.

The first stage of the scheme will not involve any cross-border sales of new policies, another source said. Instead, it will allow Hong Kong insurance companies to provide post-sales services such as handling claims, changing policyholders’ information and processing payment of premiums.

“The Insurance Authority has been liaising closely with relevant mainland authorities to pursue the idea of setting up post-sale service centres in the Greater Bay Area, whose practical importance is clearly demonstrated by the impact of the

Covid-19 outbreak ,” a spokeswoman for the authority said.

“We will sustain this dialogue to achieve some concrete progress within this year.”

Mainland Chinese are big spenders in Hong Kong’s insurance sector. At the peak, they bought HK$72.68 billion (US$9.4 billion) worth of insurance policies there in 2016, more than a third of all premiums collected in the city. The sales declined in recent years after China clamped down on payments for such overseas purchases to prevent capital outflow.

The amount plunged to only HK$5.4 billion in the first quarter of this year, down 58 per cent year on year as the pandemic prevented mainland residents from coming to the city to shop for insurance products. The opening up of the bay area provides hope of a turnaround.

Some of Hong Kong’s biggest insurers, such as AIA and Prudential, have been dramatically upping their headcounts of sales agents to prepare for the opening up of the bay area, confident it will generate new business in the long term.
“The opening of the service centres in the Greater Bay Area will be a very positive move as it marks the first step of building up an ‘insurance connect’,” said Derek Yung, chief executive of Prudential Hong Kong. “If we can prove the service centres will work well, the central government will open up the GBA further for the insurance companies in Hong Kong.”

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AIA Derek Yung Prudential Hong Kong

Author: Eleanor Hazelton

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