Hong Kong drivers accessing the Greater Bay Area development zone will soon need only one motor insurance policy instead of three different policies for the city, Macau and mainland China.
The new arrangement will make it easier for people to travel to and live and work in the Greater Bay Area cities, Edward Moncreiffe, chairman of the Hong Kong Federation of Insurers (HKFI), an industry body of the 138 local insurers, said in an interview.
“There is only one bridge, but it passes through areas with three different jurisdictions, with different rules and regulations. This means all motorists now need to purchase three insurance policies covering third-party liabilities for accidents in Hong Kong, Macau and the mainland,” said Moncreiffe, who is also the CEO of HSBC Life in Hong Kong. “This is a great example of how insurance can remove frictional costs and stimulate economic activity.”
The development zone’s blue print calls for the linking of Hong Kong, Macau and nine Guangdong province cities into an integrated economic and business hub. The implementation of a single motor insurance policy for all three jurisdictions is expected to encourage the flow of talent and capital, an integral part of the Greater Bay Area project, between the 11 cities. Its implementation could potentially coincide with the reopening of the border between Hong Kong and mainland China – closed since early last year – as well.
The new arrangement represents the unilateral recognition of private Hong Kong cars entering Guangdong province through the Hong Kong-Zhuhai-Macau Bridge with policies bought from a local insurer and whose coverage will extend to third-party liability in Hong Kong and the mainland. Unilateral recognition with Macau is yet to be finalised.
“We hope to see this type of unilateral recognition policy extended to medical insurance, property insurance or other types of life protection in the Greater Bay Area,” Moncreiffe said.
Sunny Yip Yuk-chik, a Hong Kong entrepreneur who has set up a sewage treatment plant in Zhaoqing, in the far west corner of the Greater Bay Area, welcomed the move.
“This is definitely good news. At present, I need to buy three policies, which is time-consuming and expensive. I strongly believe in the Greater Bay Area and would like to see more measures that make it easier for us to travel and work across the border,” he said.
The HKFI, which wants to see more connectivity between Hong Kong and the development zone, aims to set up a service centre in the Greater Bay Area by the end of this year to allow Hong Kong insurers to provide after-sales services to policyholders, Moncreiffe said. He also wants to see investment-linked insurance policies being sold under the newly launched Wealth Management Connect scheme.
“Many investment-linked products are low risk and they are suitable for Bay Area investors looking to diversify their portfolios,” he said. “In the UK and other markets, investment-linked policies are mainstream retirement protection products, but represent a small portion of sales in Hong Kong. We want to see Hong Kong catch up on this international trend.”
In the first half of 2019, for example, only 6 per cent of life insurance premiums in Hong Kong were investment-linked policies, compared with 17 per cent in Singapore, 39 per cent in the US and 69 per cent in the UK, according to data compiled by the HKFI.
Source: South China Morning Post (Nov 15, 2021)
