People from mainland flock to Hong Kong to scoop up insurance deals

File photo shows Hong Kong. [Photo/Xinhua]

A fresh shopping craze of people from the Chinese mainland is unfolding in Hong Kong, but this time the seasoned shoppers are not after luxuries, but insurance, reports the Securities Times.

According to the statistics of the insurance authority of Hong Kong, premiums of mainland customers' insurance orders in the first half of 2016 hit a record high of 30.1 billion Hong Kong dollars (around 3.88 billion US dollars), an increase of 116 percent year-on-year.

Instead of the luxury stores, counters of the insurance companies are now thronged with mainland clients scrambling to buy insurance.

The most popular are critical illness insurance, investment-oriented insurance or establishing family trusts, with lower premiums, higher dividends and wider coverage proving the main drawcards for mainland clients.

Insurance in Hong Kong on average costs 10-30 percent less than on the mainland, and on the mainland insurance only covers up to 40 types of critical illnesses, while those in Hong Kong cover 50 to 120 types.

Buying large sum insurance in Hong Kong is also a way to avoid potential inheritance tax by transferring assets abroad.

Thanks to the booming demand, the business has also attracted a flock of those from the mainland who are working in Hong Kong and selling insurance.

The Securities Times also says that more and more mainland securities companies are also eyeing the insurance market in Hong Kong, considering it an important part of their overseas wealth management business.

Many insurance companies in Hong Kong have been offering various training courses for insurance agents, including private banking, trust management, analysis on the laws of the mainland and Hong Kong, and dollar bonds and investment for family asset inheritance, which are in great demand by mainland clients.

Despite the frenzy, experts in insurance are warning that buying insurance is not suitable for everyone, according to the reports of southcn.com.

Since the insurance bought in Hong Kong is not bound by mainland laws, legal disputes will be troublesome for mainland clients.

Such insurance, purchased and settled in US dollars, is also exposed to exchange rate risks.

The price advantage may also be offset by the cost of the procedures for exchanging currencies and the cost of trips to Hong Kong for submitting fees, if the annual premium is within 50,000 yuan (around 7,488 US dollars).

Senior insurance agents from Hong Kong also warn that clients from the mainland buying insurance in Hong Kong should be wary of illegal agents, reports southcn.com.

The Securities Times reports that Hong Kong insurance authority has ordered that mainland clients buying insurances in Hong Kong should fill a statement, clarifying the purchase process, dividend, and exchange rate of the insurance as of September 1, 2016. It has also ordered the agents to clearly explain these to the clients one by one.