UnionPay, China's dominant payment network, has prohibited mainlanders from using its cards to buy insurance in Hong Kong, other than for accident and medical coverage.
In a primer released by Bloomberg Intelligence, Steven Lam, contributing analyst, writes that the move, announced in an Oct. 29 statement, highlights another effort by Chinese authorities to curb capital outflows.
Mainland Chinese have rushed to buy Hong Kong insurance products. Sales to mainlanders jumped 117% year on year in the first two quarters of 2016, up from 94% in 1Q, according to Lam.
“One reason for the appeal of Hong Kong insurance is that dollar-based policies serve as a means to diversify amid a depreciating yuan. Despite the eye-catching growth rate, the amounts involved remain small - just $2 billion in 2Q,” notes Lam.