Hong Kong’s insurance boom is attracting mainlanders looking for work

Hong Kong is seeing an influx of professionals from mainland China’s financial and technology sectors who are disenchanted with their career and salary prospects across the border. Many are trying to make a living and stay in town by selling insurance products, giving a boost to a once dormant industry.

Insurers and agents at AIA Group Ltd., Prudential Plc and other financial firms in Hong Kong are recruiting more Chinese nationals to sell insurance plans to mainland visitors. That business, which has drawn regulatory scrutiny in the past, is booming again after collapsing during the coronavirus pandemic.

Chinese tourists have collectively invested more than HK$75 billion ($9.6 billion) in Hong Kong insurance policies since the start of 2023, after authorities lifted strict border controls that were in place for much of of the pandemic. That’s despite a recent crackdown by city regulators on corrupt practices and the unlicensed sale of products.

Most of the policies bought by tourists are denominated in US dollars or the Hong Kong currency – which is pegged to the greenback – and have allowed Chinese citizens to move money offshore and park it in long-term investments. The products provide life insurance cover for critical or long-term illnesses and often include savings or investment-like features that increase their value over time. Buyers see them as a way to protect their assets against a weakening yuan and capture higher interest rates in the Asian financial hub.

It’s also been a boon for insurance agents, who earn big commissions from selling policies to Chinese tourists. Top performers can earn more than HK$10 million a year – which is well over US$1 million – plus bonuses, according to several agents who are familiar with such cases or have seen their firms’ internal rankings by those top winners and who asked not to be named.

Insurers in Hong Kong are not allowed to market their products on the mainland, so many agents rely on networks of family, friends and personal contacts to get Chinese nationals to travel to the Asian financial center to sign documents and buy policies. There, customers either open Hong Kong bank accounts and transfer money offshore, or use their Visa or Mastercard credit cards to purchase insurance policies. China allows individuals to move up to the equivalent of US$50,000 outside the mainland per year.

Talent visas

Hong Kong relaxed its criteria for work visas at the end of 2022 after a wave of emigration threatened to undermine the city’s status as an international financial center. It started a Top Talent Pass scheme that would grant two-year visas to job applicants from top universities and other skilled people, and scrapped the quota cap for the Quality Migrant Admission Scheme, another program that does not require applicants to have jobs lined up. beforehand.

About 200,000 people have been granted work visas for Hong Kong since then, and the vast majority of talent permit holders are from mainland China.

At a recent weekly AIA “morning briefing” for insurance agents and others interested in becoming agents, a group of about 40 people discussed selling strategies in Mandarin. Many had recently obtained visas under the talent scheme and ranged in age from their 20s to their 50s. The speaker also talked about the benefits of having a Hong Kong passport, which can be obtained after seven years of living in the semi-autonomous Chinese territory. AIA did not respond to requests for comment.

On a sweaty afternoon in July, dozens of Chinese nationals waited outside a classroom at the Hong Kong Vocational Training Council tower in Wanchai to take the exams to become insurance agents. Many scrutinized study materials bearing the AIA or Prudential logos.

Xiaohui Li, a part-time insurance agent who got his work visa for Hong Kong at the end of 2023, was there accompanying two friends. Li said he has worked for more than a decade at a Chinese internet company in Shenzhen and currently earns more than 1 million yuan ($139,600) annually, but plans to quit his job to work full-time. whole for Prudential.

She said she sees it as a good time to move from the declining tech sector to the booming insurance market. “It’s hard to say how many more years you can earn the same fat salary from those tech companies after middle age,” said Li, who is in her 30s, adding that she believes older workers are more likely to be laid off .

Shen, a Hong Kong work visa holder who asked that her first name not be used, flew from Beijing to take the exam. She said she is keeping her job in mainland China for now, but wants to work part-time as an insurance agent in Hong Kong and earn enough money to renew her visa in the future. This could be a way for her children to come to Hong Kong for school later, she said.

Payment matters

People who came to Hong Kong under the Top Talent Pass program can apply for visa extensions if they have a job with a “market-level” pay package, according to the city’s immigration department. The average annual base salary for insurance agents in Hong Kong is $473,564 a year, and their average bonus is $66,256, according to ERI Economic Research Institute data.

It wasn’t a safe bet for everyone. I am a Ph.D. the holder, who asked to be identified only by her last name, said she received a work visa for Hong Kong last year after teaching at international schools in southern China for several years. Soon after, the agent who helped her with her visa application invited her to work for Prudential and said that the income Sun could earn as an insurance agent could help her renew their visa – and eventually become a permanent resident of Hong Kong.

Sun said he was told he could receive a $60,000 sign-on bonus from the insurer if he took a series of online and in-person courses and sold policies with at least $90,000 in premiums over six months.

She said she bought a savings and life insurance policy with an annual premium of $19,300 – which covered minimum sales requirements – and collected a $45,000 ($5,776) commission on it for the first year. However, she did not get the bonus because she was late for one of the online training sessions, and Prudential terminated its agreement to hire her, according to documents reviewed by Bloomberg News.

Sun said that also means it won’t collect future fees from the policy it purchased. She filed complaints against Prudential with the Insurance Authority of Hong Kong, which informed her it had referred her to the company, according to emails reviewed by Bloomberg.

A Prudential spokesman said it does not comment on individual cases, but it is important that its financial advisers complete the necessary training to comply with regulatory requirements and maintain their professional standards when serving clients.

Hong Kong regulators have become aware that some insurance agents are buying policies for themselves and reporting commissions as income. When reviewing visa renewal applications, immigration authorities asked insurance agents to provide monthly commission statements and to state how many insurance plans they sold for people other than themselves, according to some agents.

Hong Kong’s Labor and Welfare Secretary Chris Sun said in late June that the immigration office would be very strict in reviewing applications for extension of stay from insurance agencies.

Newer participants

Regulatory scrutiny aside, several companies and agents expect the business of selling insurance products to mainland visitors to continue to grow.

HSBC Life, the insurance arm of HSBC Holdings Plc, has also increased sales of policies to Chinese tourists through the bank’s branches and other platforms. Chow Tai Fook Life Insurance Co., which recently changed its name from FTLife, said half the policies. it was sold to mainland countries last year, with sales exceeding pre-pandemic levels.

“In the long term, we believe Hong Kong’s insurance offerings will continue to attract customers from mainland China,” said Man Kit Ip, chief executive of CTF Life. He added that his company plans to increase the number of agents by 50% to around 3,000 in the financial year starting July 1, 2024.

Daniel Niu worked for 17 years at a state-backed securities brokerage in Shenzhen before quitting his job as a sales manager with an annual salary of 800,000 yuan and moving to Hong Kong this year. The 39-year-old works as an insurance agent while pursuing a part-time master’s degree, which will eventually allow him to obtain a two-year non-local graduate work visa.

Niu said she wants to eventually become a permanent resident of Hong Kong and sees the city as a better place to raise her 8-year-old. He estimates he needs to earn at least $70,000 a month to cover his living expenses, which include rent, school fees and groceries. He had the opportunity to join his former employer’s Hong Kong branch, but said it offered limited pay and growth opportunities.

As an insurance agent, Niu said there is no upper limit to his income. “I just hope they can have deep pockets,” he said.

Photo: Signage for AIA Group Ltd. on top of the AIA Central building in Hong Kong, China, Friday, August 2, 2024. Photo credit: Lam Yik/Bloomberg

Copyright 2024 Bloomberg.

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