Insurers may suffer after CIRC warning

Hong Kong insurers may be affected after the China Insurance Regulatory Commission (CIRC) warned mainland residents about the risks of purchasing insurance products in Hong Kong, as the yuan weakened.

Analysts said the warning is to defend local insurers which lost business as a result. The CIRC issued a statement on its website that said insurance products issued by Hong Kong insurers were not protected by mainland laws. It highlighted the legal fees for any insurance disputes are higher in the city. It also said policies bought in Hong Kong would face exchange-rate risks while Hong Kong has no regulation on dividend payment or cash values.

“Policyholders would not get anything back if they surrendered their Hong Kong insurance policies within two years after the purchase,” the CIRC stated. “The Hong Kong Insurance Claims Complaint Bureau can only handle compensation up to HKD1 million.”