GBA after-sales service centres to boost health and motor insurance sales

The proposal is part of Hong Kong government's Insurance Connect initiative in the Greater Bay Area.

When Hong Kong Chief Executive John Lee Ka-chiu expressed that the government is keen on building after-sales services centres on the Mainland, insurance experts interviewed by Hong Kong Business unanimously welcomed the idea. They all agreed that both Hong Kong insurers and China Mainland policyholders will benefit from a more convenient premium settlement and claim filing process.

The Hong Kong government’s proposal to build after-sales service centres in Nansha and Qianhai is part of the Insurance Connect initiative in the Greater Bay Area (GBA). This makes it easier for China Mainland policyholders to make claims. In its initial phase, Insurance Connect first allowed the direct settlement of health claims at a public hospital in Shenzhen with Hong Kong and Macau insurers. It also enables Hong Kong insurers to establish customer service centres in the GBA.

In an exclusive interview with Hong Kong Business, Sravani Ampabathina, Insurance Analyst at GlobalData said that whilst the initial focus is on after-sales support, the role of these centres is expected to increase gradually.

“Insurers are hopeful that the service centres will be able to conduct offshore product promotion during the development phases.

Hong Kong insurers rely heavily on Mainland Chinese Visitors (MCVs) for the purchase of life insurance policies. Due to the high rate of returns offered on insurance in Hong Kong, MCVs favour Hong Kong insurers,” Sravani said.

GlobalData’s research said that MCVs account for 41.8% of the life insurance industry’s new business in Q4 in 2018. However, China limited cross-border sales to stop capital outflow, which led MCVs to travel to Hong Kong to get insurance, lowering their participation to 25% in 2019. The COVID-19 travel restrictions decreased MCVs contribution to the life insurance segment’s new business, dropping it to 0.4% in Q4 2020.

GlobalData's Sravani predicts that after this, insurers from China and Hong Kong will soon launch cross-boundary life, health, and motor policies, along with other innovative insurance products, if they have not already.

“Permitting insurers to sell and service policies in GBA would steeply boost Hong Kong life insurers’ sales. This would also enable Hong Kong insurers to use consumer relationships developed via the sale of health or motor insurance to promote higher-margin offshore products to

MCVs,” Sravani said.

Insurers and regulators react “With a population of 86 million people and a very low insurance penetration rate compared to Hong Kong, the GBA offers insurers a huge and largely untapped market for growth. The population in the GBA has a higher standard of living and awareness, which is expected to drive demand for life insurance products. Simultaneously, the development of the GBA and its vulnerability to property damage due to floods and other natural disasters will create a new business opportunity for general insurers and reinsurers,” Sravani said.

Chief Strategy Officer of Manulife Hong Kong Carrie Tong hopes that the scheme and the mutual access of insurance markets in the GBA will be implemented soon.

“[I] believe these service centres will enable Hong Kong insurance companies to provide Mainland residents holding Hong Kong policies with a range of after-sales services such as premium renewal, claims, and policy enquiry in the GBA. These service centres will also help attract more Mainland visitors to Hong Kong to purchase insurance products and open new opportunities for the development of Hong Kong's insurance industry,”