In the first three months of this year, 7,556 regular premium products were sold, according to figures published by Hong Kong’s Office of the Commissioner of Insurance. This is a fall of about 42% compared to the 13,031 products sold in the same period in 2014.
“The figures come as no surprise,” said David Halley, managing director of Hong Kong-based advisory firm, Capstone Financial. “Insurance broking firms in Hong Kong had virtually all their products closed in the first quarter and the regulators have shown that long term, they wish to curtail the sale of ILAS in Hong Kong.
“Advisers are starting to question the options available to them under just a Confederation of Insurance Brokers (CIB) or Professional Insurance Brokers Association (PIBA) licence.”
Traditionally consumers investing in ILAS products, which are life insurance policies with underlying investments, were often faced with very poor surrender values if they encashed their policy early.
Regulators in Hong Kong decided to tighten the rules so that commission is paid over a number of years after there were complaints that the products failed to protect consumers and the high initial fees were unfair.
In April, the chairman of Hong Kong’s Independent Financial Advisors Association said wealth managers will suffer “collateral damage” due to the short time frame businesses were given to make changes to the way ILAS products were sold.