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 trade.
Insurers and brokers at AIA Group Ltd., Prudential Plc and different monetary companies in Hong Kong are recruiting extra Chinese language residents to promote insurance coverage to guests from the mainland. That enterprise, which has drawn regulatory scrutiny prior to now, 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 have been in place for a lot of the pandemic. That’s regardless of a current crackdown by town’s regulators on corrupt practices and unlicensed promoting of the merchandise.
Many of the insurance policies purchased by vacationers are denominated in U.S. {dollars} or Hong Kong’s forex — 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 vital sickness or time period life insurance coverage protection, and infrequently embody financial savings or investment-like options that improve their worth over time. Patrons see them as a option to safeguard their property in opposition to the weakening yuan and to seize the Asian monetary hub’s larger rates of interest.
It’s additionally been a bonanza for insurance coverage brokers, who acquire 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 effectively over a million U.S. {dollars}—plus bonuses, based on a number of brokers who’re conscious of such circumstances or seen their agency’s inside 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, buddies 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 global monetary hub. It began a Prime Expertise Cross Scheme that may 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 move holders are from mainland China.
At a current AIA weekly “morning briefing” for insurance coverage brokers and others serious about turning into brokers, a gaggle of about 40 people mentioned promoting methods in Mandarin. Many had lately gotten visas underneath 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 have been ready exterior a classroom at Hong Kong’s Vocational Coaching Council tower in Wanchai to take exams required to turn out to be an insurance coverage agent. Many have been poring over examine supplies bearing AIA or Prudential logos.
Xiaohui Li, a part-time insurance coverage agent who acquired her Hong Kong work visa in late 2023, was there accompanying two buddies. Li mentioned she has labored for greater than a decade at a Chinese language web firm in Shenzhen and at the moment earns greater than 1 million yuan ($139,600) yearly, however she intends to stop her job to work full-time for Prudential.
She mentioned she thinks it’s a good time to maneuver from the fading tech sector to the booming insurance coverage market. “It’s hard to say how many years you can still earn the same fat paycheck from those tech companies after middle age,” mentioned Li, who’s in her late 30s, including that she believes older employees 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 mentioned she is conserving her job in mainland China for now, however needs to work part-time as a Hong Kong insurance coverage agent and earn sufficient cash to resume her visa sooner or later. That may very well be an avenue for her youngsters to come back to Hong Kong for college in a while, she mentioned.
Pay Issues
Individuals who got here to Hong Kong underneath the Prime Expertise Cross Scheme can apply to increase their visas if they’ve a job with a remuneration package deal at “market level,” based on 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, based on 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, mentioned 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 mentioned the earnings Solar may earn as an insurance coverage agent may assist her renew her visa—and ultimately turn out to be a Hong Kong everlasting resident.
Solar mentioned she was advised she may get a HK$60,000 sign-on bonus from the insurer if she accomplished a collection of on-line and in-person trainings, and bought insurance policies with at the very least HK$90,000 in premiums over six months.
She mentioned she purchased a financial savings and life insurance coverage coverage for herself with a $19,300 annual premium— which coated 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, based on paperwork reviewed by Bloomberg Information.
Solar mentioned that additionally means she received’t acquire future commissions from the coverage that she bought. She has filed grievances in opposition to Prudential with Hong Kong’s Insurance coverage Authority, which knowledgeable her it has referred it to the corporate, based on emails reviewed by Bloomberg.
A Prudential spokesperson mentioned it doesn’t touch upon particular person circumstances, however that it is necessary for its monetary consultants to finish needed trainings to adjust to regulatory necessities and uphold its skilled requirements when serving prospects.
Hong Kong regulators have turn out to be conscious that some insurance coverage brokers are shopping for insurance policies for themselves and reporting the commissions as earnings. 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 coverage they bought have been for people aside from themselves, based on some brokers.
Hong Kong Secretary for Labour and Welfare Chris Solar mentioned in late June that the immigration workplace will likely be very strict in vetting purposes for extensions of keep from insurance coverage brokers.
Newer Entrants
Regulatory scrutiny apart, extra corporations and brokers count on 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 growing 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, mentioned half of the insurance policies it bought final 12 months was to mainlanders, and gross sales exceeded pre-pandemic ranges.
“In the long run, we believe that insurance offerings in Hong Kong will continue to attract customers from Mainland China,” mentioned Man Equipment Ip, chief govt 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 shifting 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 mentioned he needs to ultimately turn out to be a everlasting resident in Hong Kong, and sees town as a greater place to lift his 8-year-old baby. He estimates he must earn at the very least HK$70,000 a month to cowl his residing bills, which embody lease, faculty charges and groceries. He had a chance to affix the Hong Kong department of his earlier employer, however mentioned it provided restricted wage and progress alternatives.
As an insurance coverage agent, Niu mentioned there is no such thing as a higher restrict to his earnings. “I just hope that I can have deep pockets,” he mentioned.
