Survey: Nearly Half Of Mainland Consumers Interested In Purchasing Life Insurance In Hong Kong
March 22, 2023
Hong Kong, March 22, 2023 – Following the recent border reopening, appetite is high for mainland Chinese consumers who want to travel to Hong Kong and purchase Hong Kong life insurance policies. According to a new Oliver Wyman survey, 72% of mainland consumers plan to travel to Hong Kong within the next 24 months and 47% are interested in purchasing a life insurance policy during their trip. The latter figure reaches 65% for consumers from the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”).
Border restrictions have led to a slump in Hong Kong’s life insurance industry, with annualized premium equivalents down nearly 60% compared to pre-COVID-19 levels, according to data from the Insurance Authority.
Louisa Li, Partner at Oliver Wyman, said: “We anticipate strong demand for Hong Kong given its role as an insurance hub that offers extensive coverage and a trusted regulatory environment. Much of the returning demand from mainland consumers will be those looking to increase coverage rather than buying for the first time. These consumers are seeking core product propositions, such as superior coverage scope and better long-term financial returns.”
The survey, conducted in February 2023, aims to provide a deep dive on those who plan to purchase insurance in Hong Kong in the next 24 months (“mainland Chinese buyers”), and examine how their risk awareness, extent of insurance coverage, purchasing behavior, and broader offshore financial needs have changed post-COVID-19.
Growing awareness of life and health protection gaps
About 60% of the mainland Chinese buyers surveyed indicated an increase in concern over their life and health protection post-COVID-19. Most also expressed they felt more inclined to purchase life insurance in Hong Kong now compared to three years ago. When considering the city’s insurance offerings, the ability to access overseas medical resources, the trust in the local regulatory environment, and the industry’s overall reputation have become more important to consumers post-COVID-19.
For mainland Chinese buyers, the most pressing concerns are critical illness or death, and insufficient medical funds and resources; the younger the consumers, the more pronounced these fears are. For those planning to purchase life insurance in Hong Kong in the next 24 months, around 80% are interested in critical illness or medical healthcare products. The product features that are most critical to mainland consumers are disease coverage, and geographical and network coverage; both factors are more important post-COVID-19. While the priority of pricing is slightly lower, many respondents also expressed increased consideration toward value for money.
Increased preference for long-term growth and stable returns
Mainland Chinese buyers prefer products that provide long-term growth and low volatility returns. Post-COVID-19, their appetite for offshore investment allocation has also increased. Savings products are the only type of product that mainland Chinese buyers have shown a clear preference for increasing their coverage in Hong Kong rather than in mainland China. For those planning to purchase life insurance in Hong Kong in the next 24 months, 61% are also interested in increasing their savings coverage. The key savings propositions that mainland Chinese buyers value are expected returns, a guarantee of returns, and flexibility with regard to withdrawals, while features such as foreign exchange allocation and legacy planning are less important.
“We foresee continued demand for savings products in Hong Kong as a means for consumers to accumulate and grow wealth. Hong Kong offers higher expected returns, and its trusted financial system provides consumers with a base from which they can diversify and broaden their portfolios,” added Li.
Evolving engagement-based preferences post-COVID-19
From an engagement perspective, mainland Chinese buyers’ purchasing behaviors and preferences have also changed. Compared to pre-COVID-19, 56% do more research by themselves when purchasing insurance policies. While insurance agents and brokers remain the preferred distribution channels, only 30% of the respondents surveyed rely on recommendations from their agent or relationship manager when shopping for insurance. Instead, they view brand and product differentiation as more important factors for selecting an insurer.
Mainland Chinese buyers are also increasingly seeking seamless ways to manage their policies post-sales. Compared to pre-COVID-19, 58% demonstrated a greater preference toward obtaining policy information via online channels. More than half also said they would prefer not to travel to Hong Kong for policy servicing should there be alternative options in the future.
More integrated GBA ecosystem
Focusing on GBA consumers, 65% are interested in buying life insurance in Hong Kong in the next 24 months. Compared to their non-GBA counterparts, the GBA respondents indicated a higher demand for health and critical illness insurance. They were also more concerned about their retirement, and demonstrated a preference toward living independently post-retirement, with more choosing to live in a high-end senior home than with their children.
Jingwei Jia, Partner at Oliver Wyman, said: “We see an increase in talent mobility and cross-border connectivity across the GBA region, with an evolving community powered by encouraging policies and world-class infrastructure. Expected to be home to one hundred million people by 2030 with a growing aging population, the GBA is where we believe insurers and other ecosystem players should actively eye when building out retirement and healthcare propositions.”
About the Survey
The online questionnaire was fielded in the Chinese mainland in February 2023. Oliver Wyman surveyed over 2,000 residents aged 20 and above from tier 1 to 3 cities, supplemented by one-on-one interviews with insurance agents from various insurers that primarily serve mainland consumers.