Hong Kong is seeing an inflow of execs from mainland China’s finance and tech sectors who’re disillusioned with their profession and wage prospects throughout the border. Many try to make a residing and keep within the metropolis by peddling insurance coverage merchandise, giving a lift to a once-sleepy business.
Insurers and brokers at AIA Group Ltd., Prudential Plc and different monetary corporations in Hong Kong are recruiting extra Chinese language residents to promote insurance policy to guests from the mainland. That enterprise, which has drawn regulatory scrutiny previously, is booming once more after slumping throughout the coronavirus pandemic.
Chinese language vacationers have collectively poured greater than HK$75 billion ($9.6 billion) into insurance coverage insurance policies in Hong Kong for the reason that begin of 2023, after authorities lifted strict border controls that had been in place for a lot of the pandemic. That’s regardless of a latest crackdown by town’s regulators on corrupt practices and unlicensed promoting of the merchandise.
A lot of the insurance policies purchased by vacationers are denominated in US {dollars} or Hong Kong’s foreign money — which is pegged to the buck — and have enabled Chinese language residents to maneuver cash offshore and park it in long-term investments. The merchandise present essential sickness or time period life insurance coverage protection, and infrequently embody financial savings or investment-like options that improve their worth over time. Consumers see them as a option to safeguard their belongings towards the weakening yuan and to seize the Asian monetary hub’s increased rates of interest.
It’s additionally been a bonanza for insurance coverage brokers, who accumulate giant commissions from promoting the insurance policies to Chinese language vacationers. Prime performers can earn greater than HK$10 million a 12 months — which is nicely over a million US {dollars} — plus bonuses, in keeping with a number of brokers who’re conscious of such circumstances or seen their agency’s inner rankings of high earners, and who requested to not be named.
Insurers in Hong Kong aren’t allowed to market their merchandise on the mainland, so many brokers depend on networks of household, pals and private contacts to get Chinese language residents to journey to the Asian monetary hub to signal paperwork and purchase insurance policies. There, prospects both open Hong Kong financial institution accounts and wire cash offshore, or use their Visa or Mastercard bank cards to buy insurance coverage insurance policies. China permits people to maneuver as much as the equal of $50,000 out of the mainland per 12 months.
Expertise Visas
Hong Kong loosened its work visa standards in late 2022, after a wave of emigration threatened to undermine town’s standing as a world monetary hub. It began a Prime Expertise Move Scheme that might give two-year visas to job seekers from high universities and different certified people, and scrapped the quota restrict for its High quality Migrant Admission Scheme, one other program that doesn’t require candidates to have jobs lined up beforehand.
About 200,000 folks have acquired Hong Kong work visas since, and the overwhelming majority of the expertise cross holders are from mainland China.
At a latest AIA weekly “morning briefing” for insurance coverage brokers and others eager about turning into brokers, a bunch of about 40 people mentioned promoting methods in Mandarin. Many had lately gotten visas beneath the expertise scheme and their ages ranged from the 20s to 50s. The speaker additionally talked about the advantages of getting a Hong Kong passport, which could be gotten after seven years of residing within the semi-autonomous Chinese language territory. AIA didn’t reply to requests for remark.
On a sweat-laced afternoon in July, dozens of Chinese language residents had been ready outdoors a classroom at Hong Kong’s Vocational Coaching Council tower in Wanchai to take exams required to develop into an insurance coverage agent. Many had been poring over examine supplies bearing AIA or Prudential logos.
Xiaohui Li, a part-time insurance coverage agent who obtained her Hong Kong work visa in late 2023, was there accompanying two pals. Li stated she has labored for greater than a decade at a Chinese language web firm in Shenzhen and presently earns greater than 1 million yuan ($139,600) yearly, however she intends to stop her job to work full-time for Prudential.
She stated she thinks it’s a good time to maneuver from the fading tech sector to the booming insurance coverage market. “It’s exhausting to say what number of years you’ll be able to nonetheless earn the identical fats paycheck from these tech corporations after center age,” stated Li, who’s in her late 30s, including that she believes older staff usually tend to get laid off.
Shen, a Hong Kong work visa holder who requested that her first title not be used, had flown in from Beijing to take the examination. She stated she is holding her job in mainland China for now, however desires to work part-time as a Hong Kong insurance coverage agent and earn sufficient cash to resume her visa sooner or later. That could possibly be an avenue for her kids to come back to Hong Kong for varsity in a while, she stated.
Pay Issues
Individuals who got here to Hong Kong beneath the Prime Expertise Move Scheme can apply to increase their visas if they’ve a job with a remuneration package deal at “market level,” in keeping with town’s immigration division. The common base annual wage for Hong Kong insurance coverage brokers is HK$473,564 a 12 months, and their common bonus is HK$66,256, in keeping with knowledge from ERI Financial Analysis Institute.
It hasn’t been a surefire wager for everybody. Solar, a Ph.D. holder who requested to be recognized solely by her final title, stated she acquired a Hong Kong work visa final 12 months after instructing at worldwide colleges in southern China for a number of years. Shortly after, the agent who helped along with her visa software invited her to work for Prudential, and stated the revenue Solar may earn as an insurance coverage agent may assist her renew her visa — and ultimately develop into a Hong Kong everlasting resident.
Solar stated she was instructed she may get a HK$60,000 sign-on bonus from the insurer if she accomplished a sequence of on-line and in-person trainings, and offered insurance policies with a minimum of HK$90,000 in premiums over six months.
She stated she purchased a financial savings and life insurance coverage coverage for herself with a $19,300 annual premium — which lined the minimal gross sales requirement — and picked up a HK$45,000 ($5,776) fee from it for the primary 12 months. Nevertheless, she didn’t find yourself receiving the bonus as a result of she was late for one of many on-line trainings, and Prudential terminated its settlement to rent her, in keeping with paperwork reviewed by Bloomberg Information.
Solar stated that additionally means she received’t accumulate future commissions from the coverage that she bought. She has filed grievances towards Prudential with Hong Kong’s Insurance coverage Authority, which knowledgeable her it has referred it to the corporate, in keeping with emails reviewed by Bloomberg.
A Prudential spokesperson stated it doesn’t touch upon particular person circumstances, however that it can be crucial for its monetary consultants to finish vital trainings to adjust to regulatory necessities and uphold its skilled requirements when serving prospects.
Hong Kong regulators have develop into conscious that some insurance coverage brokers are shopping for insurance policies for themselves and reporting the commissions as revenue. When reviewing visa renewal requests, immigration authorities have been asking insurance coverage brokers to offer month-to-month fee statements, and to state what number of insurance policy they offered had been for people apart from themselves, in keeping with some brokers.
Hong Kong Secretary for Labour and Welfare Chris Sun said in late June that the immigration workplace will probably be very strict in vetting functions for extensions of keep from insurance coverage brokers.
Newer Entrants
Regulatory scrutiny apart, extra corporations and brokers anticipate the enterprise of promoting insurance coverage merchandise to mainland guests to maintain booming.
HSBC Life, the insurance coverage arm of HSBC Holdings Plc, has additionally been rising gross sales of insurance policies to Chinese language vacationers by way of the financial institution’s branches and different platforms.Chow Tai Fook Life Insurance coverage Co., which lately modified its title from FTLife, stated half of the insurance policies it offered final 12 months was to mainlanders, and gross sales exceeded pre-pandemic ranges.
“In the long term, we consider that insurance coverage choices in Hong Kong will proceed to draw prospects from Mainland China,” stated Man Equipment Ip, chief government officer of CTF Life. He added that his firm plans to extend the variety of brokers by 50% to about 3,000 within the monetary 12 months starting July 1, 2024.
Daniel Niu labored for 17 years in a state-backed securities brokerage in Shenzhen earlier than quitting his gross sales supervisor job with an 800,000 yuan annual wage and transferring to Hong Kong this 12 months. The 39-year-old is working as an insurance coverage agent whereas pursuing a part-time grasp’s diploma that may ultimately allow him to get a two-year work visa for non-local graduates.
Niu stated he desires to ultimately develop into a everlasting resident in Hong Kong, and sees town as a greater place to lift his 8-year-old youngster. He estimates he must earn a minimum of HK$70,000 a month to cowl his residing bills, which embody hire, faculty charges and groceries. He had a possibility to affix the Hong Kong department of his earlier employer, however stated it supplied restricted wage and development alternatives.
As an insurance coverage agent, Niu stated there isn’t a higher restrict to his revenue. “I simply hope that I can have deep pockets,” he stated.
{Photograph}: Signage for AIA Group Ltd. atop the AIA Central constructing in Hong Kong, China, on Friday, Aug. 2, 2024. Picture credit score: Lam Yik/Bloomberg
Copyright 2024 Bloomberg.
Matters
Talent
