Hong Kong’s major insurers are dramatically increasing their headcounts this year in a bid to boost local sales to compensate for the loss of their biggest source of income – mainland Chinese visitors buying insurance policies in the city.
AIA, the biggest insurer in the city, aims to hire 6,000 more sales agents this year, while Prudential wants to add 4,000. Manulife and Zurich Insurance have both vowed to hire more this year too, according to executives.
The increased hiring had boosted the total number of Hong Kong-based insurance sales staff by 5 per cent to a record 129,939 at the end of May, according to data from the Insurance Authority.
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The city’s insurers are having to rely more heavily on local sales because travel restrictions designed to stop the spread of Covid-19 have cut off one of their main revenue drivers – mainlanders crossing the border to buy insurance products in-person in Hong Kong.
Mainland Chinese, the biggest spenders on Hong Kong insurance policies before the pandemic began early last year, forked out 98 per cent less in the first quarter of 2021 than a year prior as the outbreak brought cross-border traffic to a standstill.
They only spent HK$100 million (US$12.89 million) on life and medical insurance policies in Hong Kong, just 0.3 per cent of the total spend in the city. In comparison, mainlanders accounted for 25 per cent of all sales of life policies in Hong Kong in 2019.
The industry has managed to stay afloat, however, expanding the workforces to boost local sales. Total sales of new life insurance policies rose 16 per cent in the first quarter to HK$40.7 billion, according to the Insurance Authority. Driving the growth are investment-linked life policies, that allow policyholders to invest in a number of funds for a higher return. The segment grew by an annual rate of 153 per cent to HK$6.3 billion during the quarter.
“This shows there is still a lot of appetite from many Hongkongers to take control of their own investment decisions within the security of a long-term insurance policy,” said Edward Moncreiffe, chairman of the Hong Kong Federation of Insurers, the city’s industry body.
He is optimistic that mainlanders will return after the pandemic.
“Once Hong Kong’s vaccination drive has progressed and cross-border travel becomes less frictional, we would expect mainlanders to return to the Hong Kong insurance industry to take advantage of the best-in-class products and services that we offer here,” said Moncreiffe, who is also head of the Hong Kong office of HSBC Life.
He said the insurance industry has been bullish on the outlook, and future opportunities that may emerge in the Greater Bay Area. As such, many firms have recruited staff that were laid off from the airlines, hotel and tourism industries that were devastated by the pandemic.
“This demonstrates the resilience of the insurance industry as well as the way we create jobs and earnings opportunities for Hongkongers amid rising unemployment in the city,” Moncreiffe said.
Damien Green, chief executive of Manulife (International), said his company had hired 6 per cent more agents in the first quarter, taking the number to 10,690, and aims to expand the headcount by double digit percentages every year in the long-run.
Green said investment-linked products would continue to be the driving force. Manulife is the largest player in that segment, with a 35 per cent market share in the first quarter.
“The investment-linked insurance policies will become more and more popular as an investment choice while interest rates remain low,” Green said.
Prudential Hong Kong chief executive Derek Yung agreed.
“Under the low-interest rate environment, customers are looking for wealth solutions that can help them grow wealth over the long term, and investment-linked products are one of the solutions,” Yung said. “In particular, the single premium investment-linked products that pay regular dividends are becoming increasingly popular as they provide customers with a regular income.”
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